C4: COVID-19 and Human Capital: Cataclysm and Catalyzer

The COVID-19 pandemic started as a medical crisis that quickly turned into a recession as governments introduced measures that locked-down large parts of the economy. Even for firms not in lockdown, a steep decline in demand forced a large number of firms to make dramatic changes to how they invest, deploy, and manage their human capital. This raises the general question of how the pandemic impacts firms' human capital decisions, and the economic and labor market consequences this implies - both for firms and individuals. Independently of the crisis, firms were already (to varying extent) going through processes of digitalization. It seems reasonably clear that the pandemic will accelerate this digital transformation. It pushes a wide range of business activities online, some of which will lead to lasting changes in organizational- and consumer-behavior. The crisis has thus encouraged firms to implement digital technologies earlier than anticipated, and it seems to have rewarded firms that were highly digitalized before it started. We therefore believe that to understand the economic- and labor market consequences of the COVID-19 pandemic, it is important to realize that human capital decisions following the crisis and the process of digital transformation of the economy are intertwined. The key key to make significant progress on all these issues are two things. One is higher quality data. We need to be able to integrate data on characteristics of firms and industries, with data on the characteristics of individuals and government interventions in a common dataset to understand their interactions and relative effects. To better understand the dynamics of the crisis we also need real time data to observe changes as the crisis unfolds, rather than retrospective data. The other key thing needed is an interdisciplinary group of researchers who can bring a multitude of theoretical and analytical approaches to the data. Our project aims to do both.