Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/237512 
Year of Publication: 
2021
Series/Report no.: 
IDB Working Paper Series No. IDB-WP-1256
Publisher: 
Inter-American Development Bank (IDB), Washington, DC
Abstract: 
This paper examines sectoral productivity shocks of the COVID-19 pandemic, their aggregate impact, and the possible compensatory effects of improving productivity in infrastructure-related sectors. We employ the KLEMS annual dataset for a group of OECD and Latin America and the Caribbean countries, complemented with high-frequency data for 2020. First, we estimate a panel vector autoregression of growth rates in sector level labor productivity to specify the nature and size of sectoral shocks using the historical data. We then run impulse-response simulations of one standard deviation shocks in the sectors that were most affected by COVID 19. We estimate that the pandemic cut economy-wide labor productivity by 4.9 percent in Latin America, and by 3.5 percent for the entire sample. Finally, by modeling the long-run relationship between productivity shocks in the sectors most affected by COVID 19, we find that large productivity improvements in infrastructure - equivalent to at least three times the historical rates of productivity gains - may be needed to fully compensate for the negative productivity losses traceable to COVID 19.
Subjects: 
COVID-19
Sector shocks
Productivity
Infrastructure
JEL: 
O47
C51
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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