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Got a new brief out today talking about what we can learn about the 1918 pandemic. Check it out: https://research.upjohn.org/up_policypapers/22/A short, 900 word version is going to circulate later, but for those of you craving the TL;DR version, I'm gonna give it to you here on Twitter.
Unless you've been self-isolating the past 5 months, you've probably been refreshed on the 1918 influenza pandemic: 50 million people fatalities worldwide between 1918-20, with a particularly lethal fall 1918 wave featuring lockdowns, mandatory mask-wearing, and school closures.
Some have pointed to 1918 to claim:
1.) Its best to stay locked down as long as possible to prevent a second wave.
2.) Places with lockdowns recovered faster, so they're not bad for the economy.
3.) V-shaped recovery is possible-1918-19 featured only a short, mild recession.
1.) Its best to stay locked down as long as possible to prevent a second wave.
2.) Places with lockdowns recovered faster, so they're not bad for the economy.
3.) V-shaped recovery is possible-1918-19 featured only a short, mild recession.
I spent most of April combing through almost every paper I could find on 1918, incl the weekly deluge from @nberpubs. Unfortunately, the more I read, the more I became skeptical about those 3 conclusions.
Take (1): Bootsma and Ferguson (2007) in @PNASNews have a nice paper showing that places with earlier interventions had lower mortality.
However, they also point out the obvious: the more effective lockdowns were, the more they left ppl susceptible after lockdowns were lifted.
However, they also point out the obvious: the more effective lockdowns were, the more they left ppl susceptible after lockdowns were lifted.
Several cities in 1918 had to reimpose controls after people started circulating again and reintroduced the virus. We're already seeing evidence for this. Lockdowns are no substitute for a vaccine or an effective pharmaceutical therapy.
We don't know yet whether our lockdowns will be economically neutral, but Correia, Luck, and Verner (March 2020) find that cities with faster, more aggressive lockdowns may have recovered faster when the pandemic is over.
Let's hope it's true! But!
Let's hope it's true! But!
The 1918 flu disproportionately killed young adults, so cities that intervened faster were acting to preserve the lives of their most productive citizens.
In econ speak, the incidence between who benefited from lockdowns and who bore the costs in lost jobs was well-aligned.
In econ speak, the incidence between who benefited from lockdowns and who bore the costs in lost jobs was well-aligned.
For COVID, we're locking down largely to preserve the lives largely of people at or near retirement ages. This is morally good, but in simplistic terms, the young are bearing the costs for the old. This misalignment means places with longer lockdowns may fare worse this time.
Lastly, I think most people have started walking away from a V-shaped recovery (except Wall Street), but it is true that the 1918 recession was relatively mild and short.
Why might we not be equally as fortunate?
Why might we not be equally as fortunate?
One answer is that the whole basis of our economy has changed. Businesses that rely on face-to-face, virus-friendly interaction like services, travel, hospitality, etc., will likely recover slowly.
In 1918: 21% of non-farm workers were in services.
Today: 40%.
In 1918: 21% of non-farm workers were in services.
Today: 40%.
Many states have greenlit manufacturing to restart. That's great, but probably won't help the economic recovery as much as hoped.
In 1918, 32% of non-farm employment was in manufacturing. Today: 8%.
In 1918, 32% of non-farm employment was in manufacturing. Today: 8%.
Another answer is that the 1918 flu coincided with the end of WWI, which worked to help mitigate some of the pandemic's effects. Incipient labor shortages caused by the flu were at least partially offset by soldiers returning from Europe.
Further, NYC then overtook London as a financial center, turning the US from a net debtor to a net creditor. This financial boon, and the resumption of international shipping, acted to help ease the 1918-1919 recession (See Rockoff (2004)). These factors aren't in play today.
Lastly, COVID has hit blacks and Hispanics hard, & the 1918 flu had high mortalityin cities and among urban non-whites (Garrett (2007)).
However, cities back in 1918 were very different places. All major US cities were majority white, and all had more manufacturing jobs.
However, cities back in 1918 were very different places. All major US cities were majority white, and all had more manufacturing jobs.
COVID seems likely to exacerbate the problems holding back our poorer cities: fewer small businesses, more excess housing from older homeowners dying of COVID, and more disinvestment from fiscally-strained local govs cutting services to the bone.
(I should mention here that my @UpjohnInstitute colleagues @TimBartik and @BHershbein have a proposal with Bryan Stuart and Mark Muro have a couple of proposals on how to help state and local governments which you should check out there: https://www.brookings.edu/research/three-steps-the-government-needs-to-take-in-a-coronavirus-recession/)
I increasingly expect the COVID recovery to look like much-maligned Great Recession recovery: wage growth will be solid for those with a college degree or better, & disappointing for everyone else. The Fed's aggressive interventions mean that capital will probably do just fine.
In other words, contra @WalterScheidel, I don't think the wealthy will have much to fear from this pandemic: https://www.nytimes.com/2020/04/09/opinion/sunday/coronavirus-economy-history.html
There is one way I think that our COVID experience will mimic the 1918 flu: it'll leave a significant fraction of the population with long-lasting health complications.
Research has found that survivors had shorter life expectancies and higher rates of coronary heart disease.
Research has found that survivors had shorter life expectancies and higher rates of coronary heart disease.
Several papers have even argued that babies in utero during the pandemic suffered long-term consequences! Almond (2006) found evidence that the 1919 birth cohort had higher rates of disability, lower income, and lower educational attainment.
This doesn't even account for the mental health traumas of isolation and quarantines, which some people who studied the 2002-2003 SARS outbreak found evidence of PTSD and burnout among exposed health care workers.
To conclude: this time will likely be different. I'd argue for measured skepticism towards claims that everything will change, and to pay close attention to growing research on long-term COVID health effects to have a better idea of what our future labor force will look like.
