The Covid epidemic had a large impact on economic activity. In contrast, the dramatic decline in mortality from infectious diseases over the past 120 years had a small economic impact. We argue that people's response to successive Covid waves helps reconcile these two findings. Our analysis uses a unique administrative data set with anonymized monthly expenditures at the individual level that covers the first three Covid waves. Consumer expenditures fell by about the same amount in the first and third waves, even though the risk of getting infected was larger in the third wave. We find that people had pessimistic prior beliefs about the case-fatality rates that converged over time to the true case-fatality rates. Using a model where Covid is endemic, we show that the impact of Covid is small when people know the true case-fatality rate but large when people have empirically-plausible pessimistic prior beliefs about the case-fatality rate. These results reconcile the large economic impact of Covid with the small effect of the secular decline in mortality from infectious diseases estimated in the literature.

This report describes the novel key between establishment and enterprise identifiers. This key enables the combination of administrative employment data of the Institute for Employment Research (IAB) with external enterprise data that has a Creditreform or Moodys (former Bureau van Dijk) identifier. To establish this combination, we performed a record linkage between the address data of the IAB and the address data of the Mannheim Enterprise Panel (MUP) hosted at the Leibniz Centre for European Economic Research (ZEW). We briefly describe the record linkage process, present quality and representativeness checks and also discuss limitations of the data. The key will be the base of standard data products that will be available via the Research Data Centre of the IAB (FDZ). Moreover, the presented key allows to generate customized data sets.

We analyze how skill transferability and the local industry mix affect the adjustment costs of workers hit by a trade shock. Using German administrative data and novel measures of economic distance we construct an index of labor market absorptiveness that captures the degree to which workers from a particular industry are able to reallocate into other jobs. Among manufacturing workers, we find that the earnings loss associated with increased import exposure is much higher for those who live in the least absorptive regions. We conclude that the local industry composition plays an important role in the adjustment processes of workers.