Labor markets in crisis: The causal impact of Canada's COVD19 economic shutdown on hours worked for workers across the earnings distribution

We use Statistics Canada's Labour Force Survey to explore the labor market impacts of the novel coronavirus (COVID-19). Specifically, we adopt a unique identification strategy to examine the heterogeneous causal effects of the COVID-19 economic shutdown by governments on hours worked across the earnings distribution in Canada, focusing on individuals who remained employed in March and April. Most early crisis analyses found that workers in the bottom of the earnings distribution experienced a much larger negative shock to hours worked than workers in the top of the earnings distribution. However, some low-income individuals are also working more as a result of the COVID-19 economic shutdown, and this nuance is missed when only considering the net effect. When we condition on whether workers lost or gained hours, we find that workers in the bottom of the earnings distribution experienced not only the largest percentage reduction in hours, but also the largest percentage increase in hours.