A General Equilibrium Assessment of COVID-19’s Labor Productivity Impacts on China’s Regional Economies
Xi He, Edward J. Balistreri, Gyu Hyun Kim, Wendong Zhang
July 2022 [21-WP 617] (Revised)
He, X., E.J. Balistreri, G.H. Kim, and W. Zhang. 2022. "A General Equilibrium Assessment of COVID-19’s Labor Productivity Impacts on China’s Regional Economies." Working paper 21-WP 617. Center for Agricultural and Rural Development, Iowa State University.
This study introduces a database for analyzing COVID-19’s impacts on China’s regional economies. This database contains various sectoral and regional economic outcomes at the weekly and monthly level. In the context of a general equilibrium trade model, we first formulate a mathematical representation of the Chinese regional economy and calibrate the model with China’s multi-regional input-output table. We then utilize the monthly provincial and sectoral value-added and national trade series to estimate COVID-19’s province-by-month labor-productivity impacts from February 2020 to September 2020. As a year-on-year comparison, relative to February 2019 levels, we find an average 39.5% decrease in labor productivity (equivalent to around 305 million jobs) and an average 25.9% decrease in welfare. Labor productivity and welfare quickly returned to the recent high-growth trends for China in the latter half of 2020. By September 2020, relative to September 2019, average labor productivity increased by 12.2% (equivalent to around 94 million jobs) and average welfare increased by 8.2%.