A General Equilibrium Assessment of COVID-19’s Labor Productivity Impacts on China’s Regional Economies

Xi He, Edward J. Balistreri, Gyu Hyun Kim, Tao Xiong, Wendong Zhang
March 2021  [21-WP 617]

This study introduces a database that can be used to analyze COVID-19’s impacts on China’s regional economies. This database contains various sectoral and regional economic outcomes. In the context of a general equilibrium trade model, we utilize the provincial and sectoral value-added and national trade series to estimate COVID-19’s province-by-month labor-productivity impacts. Compared to February 2019 levels, we find an average 37.9% decrease in labor productivity (equivalent to around 293 million jobs) and an average 20.8% decrease in welfare across provinces in February 2020. Both labor productivity and welfare have recovered quickly since April 2020. As of September 2020, average provincial labor productivity increased by 29.8% (equivalent to around 230 million jobs) and average welfare increased by 14.7% relative to their September 2019 levels.

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