Employment effects of COVID-19 across Chilean regions: An application of the translog cost function

Abstract

Estimating an aggregated translog cost function for the period 2013-2018, and using alternative scenarios of product loss based on expert projections, this article provides a preliminary forecast of the regional employment effects of COVID-19 across Chilean regions. The total estimated loss in the average scenario was around 705,000 jobs (577,000 in the optimistic and 870,000 in the pessimistic scenarios). Relative impacts were spatially heterogeneous, ranging from 1.5% (Antofagasta Region) to 13.6% (Los Lagos Region) of total regional jobs in the average scenario. Estimated impacts may inform regionally-targeted social protection and economic stimulus policies at a time in which the virus has not fully spread and total regional employment impacts have not been realized. In any region and scenario, estimated losses were sizeable and call for rapid and spread implementation of job and production protection initiatives recently passed as well as others still being discussed in congress.