ATLANTA—Early in the U.S. COVID-19 pandemic, unemployment claims were largely driven by state shutdown orders and the nature of a state’s economy and not by the virus, according a new article by Georgia State University economists.
Their research explores state differences in the magnitude of weekly unemployment insurance claims for the weeks ending March 14 through April 25 by focusing on three factors: the impact of COVID-19, the effects of state economic structures and state orders closing non-essential businesses and the impact of the Coronavirus Aid, Relief and Economic Security Act (CARES) legislation.
During the first week studied, unemployment claims appeared to be driven by consumer reactions to the coronavirus as they adjusted their behavior prior to government shutdown orders. States with greater employment in the industries most affected by the virus and those with a larger share of workers making less than weekly unemployment benefits saw higher shares of new unemployment insurance claims.
By March 21, 31 states had issued orders prohibiting in-restaurant dining. Those that closed nonessential businesses experienced larger numbers of unemployment insurance claims per covered worker. Those that had larger numbers of employees able to work from home did not have a lower increase in new claims. This finding is contrary to what other research has suggested, the co-authors said.
“Earlier studies exploring the effects of COVID cases and school closures on state job markets suggest the reduction in employment was mainly a nationwide response to COVID, and that specific state policies to the disease had a comparatively moderate effect,” Sjoquist said. “By considering various state responses, including stay-at-home orders and those closing schools and non-essential businesses, our research provides insight into the effect of a state’s industry and employment mix on its unemployment claims during a pandemic.”
Sjoquist’s areas of expertise are state and local taxation and urban and regional economics. A specialist in the field of public finance, Sjoquist has an extensive interest in urban economics, especially local economic development, central city poverty, and education policy. He has published extensively on topics such as analysis of public policies, teenage employment, capital maintenance expenditures, local government fiscal conditions and the urban underclass. His current research interests include property taxation, school financing, local sales and income taxes.
Center for State and Local Finance
Laura Wheeler is an Associate Director, CSLF and is a senior research associate at the Fiscal Research Center and Center for State and Local Finance at Georgia State University. During her time at Georgia State University, Wheeler has worked on many issues related to state and local governments, such as forecasting revenue effects of proposed legislation, local government structure and finances, and forecasting local government revenues. She received her doctorate in economics from the Maxwell School at Syracuse University. Previously, she worked for several years with the Joint Committee on Taxation for Congress and as an independent tax policy consultant. Wheeler’s other research interests include state and local taxation, corporate taxation and welfare policy.