Digital jobs will insulate some U.S. areas from pandemic shock

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U.S. regions with the most digitally-intensive jobs will be “more insulated from the Covid-19 shock,” according to new research, while areas lacking in that type of employment are likely to be hardest hit.

Indeed, U.S. counties with high concentrations of jobs in industries such as retail and health care could see as much as a 4% decline in their annual growth rate if the shutdowns last just a month, according to the paper authored by from Jonathan Hartley, Harvard Kennedy School of Government and Christos A. Makridis, MIT Sloan School of Management.

If closures of stores, restaurants and other businesses last until June, annual GDP declines could exceed 8% in some U.S. counties, the study says. Most affected by the coronavirus, according to the report, are wholesale trade, retail trade, transportation and warehousing, education, arts, entertainment and recreation, and accommodation and food services.

The paper reached four main conclusions:

  • Rural counties are less adversely affected, due in part to less “consumer spending” in these areas compared to urban counties.
  • Poorer counties with lower median household income will be more adversely affected, as they have fewer digital jobs to cushion against physical mobility of people and goods.
  • Third, counties with lower shares of college-educated individuals are also more likely to experience greater declines in real GDP growth, which again reflects that the most educated workers are likely in more digitally-intensive jobs.
  • Lastly, counties with a larger share of individuals in non-tradable sectors — such as retail and health services — are also more heavily affected, which captures the fact that the tradables sector is more diversified and less exposed to local shocks.
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