Economic vulnerability amidst contagion: analyzing unemployment via Covid-19-induced transaction costs

This study delves into the pandemic’s influence on unemployment rates, employing the concept of transaction costs. Given the virus’s infectious nature, each transaction carries the risk of infection. In this study, Covid-19-induced transaction costs were utilized to gauge the pandemic’s impact on unemployment rates. Seven developed countries and seven developing countries were separately scrutinized for this purpose. According to the outcomes of Yilanci and Gorus’ (2020) panel causality test, Covid-19-induced transaction costs did not influence unemployment rates in developed countries. However, they significantly impacted unemployment rates in developing countries. These findings underscore the resource gap between developed and developing nations in tackling pandemic-related challenges. Policymakers should consider these economic disparities when devising strategies to alleviate the pandemic’s effects.