According to an ILO quarterly update on the global labor market, workplace closures and job losses due to the COVID-19 pandemic in 2020 has led to a loss of 8.8 percent of global working-hours, which is equivalent to the loss of 255 million full-time jobs.

1. Explain the effects of this loss in labor-hour on the global output/GDP in 2020, with the aid of a potential GDP and labor market diagram.

The same update goes on to say that the global labor income in 2020 declined by 8.3 percent, equivalent to US$3.7 trillion.

2. Can you explain why the loss in labor income (8.3 percent) was lower than the loss in labor working-hours (8.8 percent)? Use diagrams to support your argument. (Hint: think of labor productivity)

Improvements in total factor productivity (TFP) - if it helps, think of TFP this as technological advancement - are also expected to suffer because of the pandemic.

According to a NBER working paper, COVID-19 has lowered the TFP in the UK private sector by up to 5 percent.

3. Describe the effect of this fall in TFP on the UK output/GDP with the help of a diagram.