How much did the 1918 flu pandemic affect the world economy at the time? Right now, even though it seems like with modern medicine and knowledge, we have a better chance at beating this but are still being hit economically. I can't imagine that having millions dead around the world didn't have some sort of blowback even in the midst of a World War. With the precautions taken at the time, what type of losses were there in the job market? Were they that significant. I'm assuming any changes were eclipsed by the Depression setting in not too long after.
There is a problem with linking economic outcomes to one event in history, such as the 1918 Spanish flu pandemic, in that modern large economies are complex and are being affected all the time by numerous drivers, and there's no reason to assume that even the important drivers are all easily measurable. Therefore I'm going to talk about the evidence across multiple pandemics, not just the Spanish Flu. At the end I also mention a bit of US work that looks at comparisons between US states.
As you can imagine, current events are prompting a rush of papers on the economic impacts of pandemics, including one that explicitly looks at economic activity in the medium to longer-term, by Òscar Jordà, Sanjay R. Singh, and Alan M. Taylor. They looked at 15 large pandemics with at least 100,000 deaths, the earliest being Black Death of the 14th century, and up to the H1N1 Pandemic of 2009. The timeframe was up to 40 years after the pandemic. Their work is fairly European focused, because much of the economic historical research that produces the sort of useful statistics before modern-times has focused on Europe due to the availability of researchers and also the interest in why the Industrial Revolution started in Britain.
They find ongoing impacts to interest rates and wages, in opposite directions. Interest rates fall, wages rise, though the rise in wages is somewhat smaller. To quote them on interest rates:
Following a pandemic, the natural rate of interest declines for decades thereafter, reaching its nadir about 20 years later, with the natural rate about 150 bps lower had the pandemic not taken place. At about four decades later, the natural rate returns to the level it would be expected to have had the pandemic not taken place.
They do find variations between European contries, with much bigger impacts in France, Italy and Spain compared to the Netherlands, Germany and the UK.
For the wage impact they say:
The response of real wages is almost the mirror image of the response of the natural rate of interest, with its effects being felt over decades. The figure shows that real wages gradually increase until about three decades after the pandemic, where the cumulative deviation in the real wage peaks at about 5%.
They don't state if similar inter-country variation appears for wages as it did for interest rates.
The rise in wages is in all probability due to labour scarcity relative to capital following the deaths of a significant share of the labour force, much of the past pandemics happened when life expectancies were much lower so very few people survived to their 70s or 80s, and the Spanish Flu famously hit young people unusually hard. So we may not see the same impact from covid-19 due to the differing age pattern of deaths.
The cause of the fall in interest rates is less certain, it may be due to the large share of capital after the disaster relative to surviving labour, and/or due to people wanting to save more in response to the shock.
Note that this is very new work and some errors may be discovered in it in future months.
The St Louis Federal Reserve in 2007 published a report on pandemics which surveys the economic research on the impact of the Spanish flu on the USA, where inter-state comparisons can be used. The papers they discuss similarly find a rise in wages (specifically manufacturing wages), in line with the Jorda paper. Interestingly, one of their referenced papers (the paper itself is unpublished) finds a rise in per capita income growth, and argues that it's down to a larger capital share per surviving worker. Money is notoriously more transferable than labour, particularly within a currency zone, so unsurprisingly the St Louis survey doen't mention any US research on interest rate impacts.
I hope this is informative, even though it's not specific to the 1918 Spanish flu.
Sources
Òscar Jordà, Sanjay R. Singh, and Alan M. Taylor, March 2020, Longer-run economic consequences of pandemics, http://ssingh.ucdavis.edu/uploads/1/2/3/2/123250431/pandemics_jst_mar2020_.pdf
Thomas A. Garrett, 2007, Economic Effects of the 1918 Influenza Pandemic: Implications for a Modern-day Pandemic https://www.stlouisfed.org/~/media/files/pdfs/community-development/research-reports/pandemic_flu_report.pdf
Edit: fixed typo, the 2007 report was about pandemics, not coronavirus.