Introduction

The covid-19 pandemic poses great public health and economic challenges to countries around the world. Slowing down the spread of the pandemic requires implementing social distancing measures that disrupt economic activity. At the same time, some activities need to be maintained, which puts workers in these sectors at risk of contracting the virus.

How does the workers' exposure to these health and economic risks vary across sectors? Answering that question involves understanding not only how sectors vary in their direct exposure to both types of risk but also in their indirect exposure, through supply chains and demand linkages—the intricate network that constitutes the macroeconomy.

Cascade effects

We provide a measure of each sector's exposure to the health and economic risks for 43 countries. We study how risks cascade from the two groups of workers hardest hit by the pandemic.

The first group bears a higher health risk than other workers. These are people who continue working in lockdowns to provide essential goods and services, such as health care, food or pharmaceutical products. The second group bears a higher economic risk than other workers. These are people working in establishments providing services to the public, such as stores, restaurants, or cinemas. These sectors, which we term social consumption sectors, face an unprecedented disruption in their activities.

Because sectors are connected through supply chains and demand linkages, workers in other sectors are exposed to those same risks even if they do not belong to the essential or social-consumption sectors. For instance, ensuring that households have access to food during the pandemic requires keeping open not only the food industry but also the packaging industry and other industries supplying inputs to the food industry.

The health risk cascades also through demand linkages. For instance, most food products are purchased in stores and need to be delivered to those stores. The demand for food hence generates a demand for wholesale, retail and transportation services, which puts workers in these sectors at health risk. The economic risk cascades across sectors through the same types of supply and demand linkages.

Methodology

The methodology is based on a simple input-output framework, with both supply and demand linkages, calibrated on data from the World Input-Output Database. We describe the methodology in detail in the working paper.

We measure the health risk as the proportion of workers needed at the workplace to maintain the pre-pandemic household consumption in essential goods and services. We combine the model's result with Dingel and Neiman's (2020) work-at-home indicator to calculate a lower bound of the proportion of workers needed at the workplace.

We measure the economic risk as the decline in employment following a 90% drop in household demand for social consumption. A couple of things to note

  • We assume that the household retail purchases of agricultural, food and chemical products remain at their pre-pandemic levels (chemical products includes pharmaceutical products and cleaning supplies).
  • We focus on the decline in household consumption; in the scenario considered here, investment and exports remain constant. In a next version, we will present results when investment and exports are affected by the shock.

For both indcators, we calculate the country-level risk as the employment-weighted average of the sectoral risk indicator.

Note that some parameters (share of online trade, share of passenger transportation, and share of retail and transportation devoted to agricultural, food and chemical products) are calibrated on US data; the results for other countries should be interpreted with this caveat in mind.

How risk varies by sector in 43 countries

We report the health- and economic-risk measure for 43 countries in a series of interactive graphs.

These simple measures neglect many important aspects of risk (see working paper), but nonetheless reveal a very stark picture of the disparity in exposure to both types of risk, as well as the importance of including indirect effects.

In brief, we find that

  • About a quarter of the risk exposure is indirect, cascading from the essential and social-consumption sectors through supply and demand linkages.
  • Demand linkages, related to trade and transportation, account for the bulk of these cascading effects.

Health risk

The health risk (associated with maintaining essential goods and services during lockdowns) varies greatly across countries. For most countries, the indirect exposure is felt the most by the retail and land transportation sectors.

Select the country of your choice to display its risk exposure by sector.

Economic risk

The economic risk (associated with the collapse in the household demand for social consumption) varies greatly across countries.

Select the country of your choice to display its risk exposure by sector.

Select the scenario used to compute the economic-risk measure by selecting which social-consumption sectors are affected by the demand shock.

Visualizations by Julien Duranton

Updated: 7 May 2020