Impact of the COVID-19 pandemic on labour market outcomes in the UK

Abstract

This thesis investigates changes in labour market outcomes and their links to physical and mental health. It uses the exogenous nature of the COVID-19 pandemic as a unique opportunity to compare pre- and post-pandemic periods through four studies. Study One, a systematic review, assessed international literature up to January 2022 on COVID-19's effects on employment. It critically evaluated the methodological tools used in prior research and provided recommendations for improved study design. The review identified key moderators, mediators, and confounders using a theoretical diagram (DAG). Following these recommendations, Study Two employed Interrupted Time Series analysis using UK Office for National Statistics (ONS) data (up to June 2023) to investigate changes in key labour market outcomes following two policy interventions: the COVID-19 lockdown and the final stage of easing lockdown restrictions. The results show that the initial disruption caused by the lockdown was followed by a recovery in employment as restrictions were lifted, but a persistent rise in economic inactivity, which became the focus of the two final studies. Study Three used the UK Household Longitudinal Study (UKHLS), showing that being aged 50–66 (OR= 2.18, 95% CI: 1.53, 3.10) and reporting long-standing illness (OR= 1.44, 95% CI: 1.12, 1.84) were statistically significant predictors of transitioning from pre-pandemic employment to post-pandemic economic inactivity. This transition was associated with higher psychological distress.

Study Four focused on individuals aged 50–66 and explored why economic inactivity has risen. It found that the prevalence of reported poor health increased among this age group post-pandemic, suggesting that rising economic inactivity is driven by deteriorating health rather than changes in propensities of healthy or unhealthy people leaving the labour force after the pandemic. It also compared ONS and UKHLS data to explore concerns about the reliability of government statistics. This thesis identified key drivers of economic inactivity in the UK post-COVID-19 and their links to health, highlighting policy interventions to support people in remaining in or returning to work.