COVID-19 pandemic and unemployment dynamics in European economies

Abstract

This study goal to scrutinize the influences of the COVID-19 pandemic on unemployment in five selected European economies. To this end, the study uses a Fourier causality test for the period of December-2019 to December-2020. In Z-test results, Germany, Spain, and the UK have a significant positive change in unemployment due to COVID-19. The finding shows that COVID-19 cases cause unemployment for Germany, Italy, and the UK. Moreover, in terms of deaths, COVID-19 also causes unemployment in Italy and UK. Overall, the study's outcomes highlight that the pandemic increases the unemployment rate robustly in the mostly European economies. That is one of the rare negative effects of the virus on the European labor market. Novel COVID-19 findings provide a reliable guide to the future policy implication for the labor market. An active labor market policy will be needed to be in front of the world urgently.