Applied Micro Seminar - Melanie Morten (Stanford)

Location: A1/3 Physics Building

Abstract: We study the firm-level impacts of a labour supply shock induced by the unantici- pated closure of the New Zealand border due to the Covid-19 pandemic. The border closed in March 2020, in the middle of the autumn arrival season for workers under the Recognised Seasonal Employer scheme, preventing seasonal migrants from entering the country as planned. We identify firms that were expecting temporary workers but the workers did not arrive before the border closure and compare these firms to other firms where the workers arrived just before the border closure. We study the firm-level response to this migrant shock. We find that firms and workers responded flexibly in the face of labour supply shocks. In the early months of the pandemic, firms were able to replace the missing migrant workers with local workers and other temporary migrants but experienced labor shortages from June onwards. Over the year as a whole, each predicted late arrival was associated with a loss of 0.6 workers on average. Wages did not increase at the firm level, but we find some evidence of wage adjustment at the labor-market level. By January 2021, cumulative net sales were $57,000 lower in affected firms for every missing migrant