Working Paper: CEPR ID: DP14814
Authors: Dion Bongaerts; Francesco Mazzola; Wolf Wagner
Abstract: We investigate the effectiveness of business shutdowns to contain the Covid-19 disease. In March 2020, Italy shut down operations in a number of sectors. Using a difference-in-difference approach, we find that municipalities with higher exposure to closed sectors experience subsequently lower mortality rates. We estimate the resulting life savings to exceed 12.000 people over less than a month. Using estimates of remaining life-years, this translates into monetary benefits of 12 billion Euros We also show that business shutdowns exhibit rapidly diminishing returns and have effects outside the closed sectors and in other municipalities. This suggests that effective containment policies require central coordination.
Keywords: pandemic; covid19; business shutdown; coordination
JEL Codes: H12; I18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher exposure to closed sectors during the first shutdown (E44) | decline in death rates (J11) |
| first shutdown (Y20) | monetary benefits exceeding 9 billion euros (O52) |
| shutdown exposure in business centers (J65) | death rates in neighboring municipalities (R23) |
| total share of sectors closed down (L16) | marginal effectiveness of shutdowns (J65) |
| second shutdown is less effective per unit of economy closed down (E65) | death rates (J11) |