{"id":8062,"date":"2020-12-04T12:48:25","date_gmt":"2020-12-04T12:48:25","guid":{"rendered":"http:\/\/www.economicsobservatory.com\/question\/news-4-dec-2020"},"modified":"2021-02-26T15:19:12","modified_gmt":"2021-02-26T15:19:12","slug":"news-4-dec-2020","status":"publish","type":"question","link":"https:\/\/www.economicsobservatory.com\/test\/news\/4-dec-2020","title":{"rendered":"All jump and no crawl – the Covid-19 time-warp"},"content":{"rendered":"

Newsletter from 4 December 2020<\/strong><\/p>\n

Covid-19 really is changing everything. It was once a useful rule of thumb to separate out \u2018jump\u2019 and \u2018crawl\u2019 variables in economics. Anything financial \u2013 like stock prices or the exchange rate \u2013 can change value almost instantly, so that when plotted against time, the charts jump around with sharp spikes and dips. Things related to the \u2018real economy\u2019 \u2013 like employment or consumption \u2013 are slower moving, so that charting them over time normally produces smoother mountains and troughs as the economy evolves. This slower pace is because human decisions \u2013 to hire or fire, to spend or save \u2013 take time.<\/p>\n

This was in the pre-Covid-19 world. Post-pandemic, slow-moving things have sped up, as an Economics Observatory piece by Jack Blundell and Maria Ventura on the\u00a0extraordinary shifts in self-employment<\/a>\u00a0made clear this week.<\/p>\n

They first set the background: there had been a sizeable, but crawling, increase in self-employment in the UK between 2015 and the end of 2019 \u2013 an increase of around 12% (see Figure 1). Yet since the onset of the pandemic, there has been a sudden reversal, with the chart of self-employment looking more like a tanking financial \u2018jump\u2019 variable than a measure of livelihoods.<\/p>\n

\"Figure<\/p>\n

Coming up with sound policies to support the self-employed has been hard, as the authors explain. The group is diverse and includes many that work in the hardest hit industries \u2013 in-person customer services, hotels, restaurants and the arts. The first-hand economic experience of people working in these sectors \u2013 at the epicentre of the Covid-19 shock \u2013 were discussed in\u00a0this account<\/a>\u00a0we posted recently. The government\u2019s response was a support scheme \u2013 the Self-Employment Income Support Scheme (SEISS) \u2013 which paid self-employed workers based on records of their past incomes.<\/p>\n

The policy helped at an economy-wide level, with aggregate income fluctuations almost perfectly smoothed out by the scheme. Yet this masks huge differences at the individual level: some self-employed workers have suffered large income losses or are ineligible for help; at the other end of the scale, HM Revenue and Customs has confirmed that some claimants received large and unjustified amounts, and suggested that\u00a0voluntary repayments be made<\/a>. These pieces are a timely reminder that pandemic-related economic policies are blunt tools made on the fly. The Covid-19 time warp inevitably creates winners and losers.<\/p>\n

\"Maps<\/p>\n

A data piece\u00a0based on two maps<\/a>, put together by Helen Simpson at the University of Bristol\u2019s\u00a0Centre for Evidence-based Public Services<\/a>, also looked at employment patterns this week. The first shows the new tiers in England, with Tier 3 areas in the darkest shade. The second uses Office for National Statistics (ONS) data to show the share of employment in the most locked-down sectors (retail, distribution, and food and accommodation).<\/p>\n

In the South of England, there is little overlap: Cornwall, for example, is in Tier 1, but has a high share of workers in these vulnerable sectors. The North is more concerning, with a large region that is both in Tier 3 and has a high share of workers vulnerable to the stricter lockdown measures.<\/p>\n

This is another example of Covid-19 inequality, this time regional. The figure below uses UK government data to show how one measure \u2013 cases \u2013 has diverged across regions. The Observatory will continue to assess the crisis at both a national and regional level. Do check out our recent pieces on\u00a0Wales<\/a>,\u00a0Northern Ireland<\/a>\u00a0and\u00a0Scotland<\/a>.<\/p>\n

\"Figure<\/p>\n

Observatory news<\/h3>\n

We are finally official! We are grateful to the Economic and Social Research Council (ESRC<\/a>), who have announced support for the Observatory, allowing us to continue until 2022. Our new website, coming in January, will include a piece on the founding of the Observatory and we are particularly grateful to\u00a0Rachel Griffith<\/a>\u00a0of the University of Manchester and the\u00a0Institute for Fiscal Studies<\/a>, who spearheaded the project and remains a lead editor, guiding what we do and providing lots of ideas that keep the site fresh and relevant.<\/p>\n

Next, a useful (we hope) offer. In January, Romesh and I will be running the first of our masterclasses on writing economics for public consumption. We are putting together a guide of tips and tricks we have both picked up over the years and will give participants in-depth feedback on writing samples. The group size will be small (up to six) and the first one is aimed at PhD candidates. If you would like to improve your writing, get in touch via\u00a0office@economicsobservatory.com<\/a>.<\/p>\n

Finally, an important shift in the way we work. In\u00a0last week\u2019s newsletter<\/a>, Romesh commented on\u00a0the report authored by Johnny Runge and Nathan Hudson at the Economics Statistics Centre of Excellence (ESCoE) and ONS<\/a>. Having had time to mull it over, I think it is devastating for anyone working in economics. The report is a monster \u2013 235 pages \u2013 and for me comes down to two things: a shortfall in public understanding of economics; and a lack of trust in the data we use.<\/p>\n

Over time, we hope the Economics Observatory can contribute to the fight back on the first problem through our writing, masterclasses and events. On data, we are acting now. From January, all charts posted on our website will be built using embedded data (rather than static pictures), so that anyone can download, verify and challenge them. The charts in this newsletter are drawn in Vega-Lite and are on GitHub,\u00a0here<\/a>. If you are interested in data visualisation,\u00a0come and work with us<\/a>.<\/p>\n

Richard Davies, Director<\/em><\/h5>\n","protected":false},"featured_media":2713,"template":"","categories":[226,233,492,222],"tags":[489],"yoast_head":"\nAll jump and no crawl - the Covid-19 time-warp - Economics Observatory<\/title>\n<meta name=\"description\" content=\"Covid-19 really is changing everything. It was once a useful rule of thumb to separate out \u2018jump\u2019 and \u2018crawl\u2019 variables in economics.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.economicsobservatory.com\/test\/news\/4-dec-2020\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"All jump and no crawl - the Covid-19 time-warp - Economics Observatory\" \/>\n<meta property=\"og:description\" content=\"Covid-19 really is changing everything. 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