workers’ ability to perform their jobs from home, infection risks to workers) as well as labor demand shocks (firms’ financial constraints, input supply constraints, customers’ infection risk, global demand shocks, government support) to identify factors that have contributed most to job losses.

Our evidence suggests that labor demand shocks predominate overall in explaining job losses. We show that firms experiencing larger sales losses due to shutdowns, export demand shocks, supply chain disruptions, and in the case of Georgia, higher infection risk to customers, are likely to reduce their workforce more, with a sales-to-permanent workforce elasticity of approximately 0.4 in both countries studied. This suggests that although supply side interventions such as childcare support or reduced payroll taxes may shore up welfare, carefully conceived policies to sustain aggregate demand, mitigate disruptions to the supply chain, and contain the virus would be more likely to preserve jobs. Determinants of labor supply, such as essentialness, the ability to work from home, and infection risk to workers were not statistically significant determinants of workforce reductions. There is also no evidence that firms that adopted online activities or delivery mechanisms retained significantly more PFPS jobs. Among occupational characteristics posited to affect the ability to work from home (such as more physically demanding task content or more face-to-face interaction), we found that only the ICT task content of jobs was related to the share of employees working from home. Although the ability to work from home may have been instrumental in preserving the labor supply of those workers with home care responsibilities, there is no evidence from these two countries that this ability impacted the overall level of net job losses. We find some evidence that wage subsidies had a small positive effect on job retention in Jordan, but we find no evidence in either country that other policy supports preserved jobs significantly. This underscores the importance of designing and scaling policy support measures carefully to preserve viable firms and jobs in the face of large demand shocks.

We find that our model-based method predicts the level of further job losses in the winter of 2020 fairly well, based on a comparison of predictions with a COVID-period labor force survey for Jordan. Whereas it predicts the distributional impacts by gender, nationality, and educational attainment well, it fails to predict the differences by age group and wage level. Predicted and actual results show a greater rate of job loss for men employed in the formal private sector than for women and for those with less education. In addition, the rates of job loss by productive sector generally rank similarly to those observed, with some exceptions. We also document differences in the two countries’ performance in restoring formal permanent jobs versus other types of jobs (informal, temporary, self-employment) in the private sector. In Georgia, with its stronger export market presence and more flexible regulation of formal employment, formal firms were able to boost sales and hire full time workers back.<sup>54</sup> Moreover, they did so at a significantly faster rate than appears to have been the case for informal firms, for which there was no clear sign of such a formal job recovery. In contrast, in Jordan, formal sector jobs continued to decline through the fall and early winter, and at a faster rate than informal and temporary jobs in the private sector.

54 Other drivers of this difference could be policy measures to boost local demand or better containment of the virus; however, the evidence we present herein is not consistent with either explanation. Another key difference may be Georgia’s more educated workforce that is easier to train. However, this does not seem a likely explanation, since the rehiring rates are a function of a rebound in sales, rather than labor supply.

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