Failing young and temporary workers: the impact of Covid-19 on a dual labor market

Abstract

In this paper, we use monthly administrative data covering the universe of individuals registered as unemployed in 278 Portuguese municipalities to study the impact of Covid-19between March and August 2020. Using event study difference-in-differences, we document a large causal impact on unemployment, with year-on-year growth rate increases of39 and 38 percentage points in June and July, respectively. New job placements dropped significantly, especially in April. We also employ triple difference-in-differences to show that younger and middle educated individuals fell more into unemployment, while there is no evidence of differences across genders. Portugal has a dual labor market, with a larges hare of workers employed on temporary contracts. Relying on this specific characteristic, we show that the heterogeneous effects were accentuated in municipalities with a higher share of temporary workers.