COVID-19, the Great Recession and Economic Recovery: A Tale of Two Crises

Abstract

COVID-19 caused a major economic downturn, the like of which had not been seen since the Great Recession although the underlying causes of the two crises were very different; systemic risk versus a virus. Here we look at how flexible work practices, allied with adequate supports and lifelong learning opportunities, aided economic recovery following the earlier crisis in order to see if there are any lessons to be learnt for post-pandemic recovery. Overall, the results indicated that flexicurity provided a modest growth dividend during the Great Recession, typically no more than one percentage point. Of the individual components, the short-run results indicated that security along with life-long learning and part-time work proved the most beneficial, although flexible work practices also boosted growth, albeit to a lesser extent. For flexible labour markets, the long-run results indicated that the growth gains were highest in trusting economies with, or without, social partner engagement.