On the effectiveness of containment measures in controlling the COVID-19 pandemic: the role of labour market characteristics and governance

ABSTRACT

This paper shows that countries where informality is commonplace, where a small share of jobs can be performed remotely, and where government effectiveness is low, experience smaller declines in COVID-19 cases after making containment measures more stringent. This appears to be related to the fact that in these countries mobility declines less after the implementation of containment policies, which facilitates the spread of the disease.

KEYWORDS:

• Economics of COVID-19
• Informality
• Governance
• Labour Markets

JEL CLASSIFICATION:

• E26
• O11
• O17

Acknowledgments

We would like to thank two anonymous referees, David Peel, Carlo Pizzinelli, Jorge Roldos, and Alejandro Werner for very useful comments. All usual disclaimers apply. The views expressed in this paper are those of the authors and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ The Annexe presents the full list of countries included in the analysis.

² Tests are presented in the Annexe. Moreover, stationarity should not be a concern in the regressions as the dependent variables are included in forward differences.

³ Diagnostic statistics for all non-linear models are presented in the Annexe.