Health risks and labour supply: evidence from the <scp>COVID</scp>‐19 pandemic

Abstract This paper explores the relationship between health risks from COVID‐19 and UK labour supply, using pre‐existing conditions as a source of variation in COVID‐19 health risk. We find that those with pre‐existing conditions were less likely to work during the pandemic after controlling for a rich set of covariates, including labour supplied pre‐pandemic, but only when remote work was unavailable. This relationship begins by April 2020, persists through to September 2021, and shows signs of fading after COVID‐19 risks had fallen in 2022. Our results are strong enough to explain a 1–1.5 percentage point drop in employment during the pandemic. Placebo tests confirm that our estimates do not reflect labour demand shocks, and that a negative relationship between pre‐existing conditions and labour supplied, conditional upon the covariates, did not exist pre‐pandemic.