Nature of Work and Distribution of Risk: Evidence from Occupational Sorting, Skills, and Tasks

Abstract

How does the nature of work — teleworkability and contact intensity — shape the distribution of health, labor income, and unemployment risks, created by the COVID-19 pandemic? To answer this question, we consider two contexts. First, we show that the existing spousal nature-of-work-based occupational sorting in the United States matters for the distribution of these risks. In particular, we show that it mitigates the risk of catching COVID-19 through intra-household contagion relative to the case of zero sorting. Furthermore, we show that it creates a larger fraction of couples, who are excessively exposed to labor income and unemployment risks, relative to the case of zero sorting. Second, we document that teleworkable occupations require higher education and experience levels as well as greater cognitive, social, character, and computer skills relative to non-teleworkable occupations. This discrepancy affects labor income and unemployment risks by increasing the likelihood of skill mismatch for newly unemployed workers. Our results imply that the current economic downturn may have long-run effects on employment prospects and earnings of workers who had non-teleworkable or high-contact-intensity jobs at the onset of the COVID-19 outbreak. We discuss the relevant policy implications and associated policy constraints that follow from our findings.

Keywords: Teleworkability, Couples, Skills, Tasks, Labor Market Mobility, COVID-19

JEL Classification: J22, J23, J24, J63, J81