Economic Costs of Work Stoppages Caused by the COVID-19 Outbreak

Abstract

AbstractThis study explores the economic costs of work stoppages resulting from the COVID-19 pandemic. It utilizes a global multiregional dynamic computable general equilibrium model and finds that the higher the proportion of labor compensation in the initial factor distribution, the greater the economic damage. Macroeconomic loss was characterized by a monotonically increasing function, with developed countries potentially incurring greater losses than developing countries. The COVID-19 pandemic had significant negative impacts on the global labor market, with a decline in labor productivity; the cumulative global economic loss in 2020–2022 surpassed $10.4 trillion, of which the EU, the USA, and China contributed 30.44%, 18.74%, and 15.44%, respectively. Countries’ anti-epidemic responses showed great heterogeneity, with South Korea and China’s actions showing the dual advantages of protecting the economy and lives, whereas the EU failed to protect either lives or the economy. This article argues that it was necessary to adopt strict quarantine measures to control the spread of the virus in the early stages of the epidemic, but with a drop in the case fatality rate and the introduction of vaccinations, strict control measures had to be removed to protect the economy.