1. Estimating the Costs and Benefits of Mandated Business Closures in a Pandemic
- Author
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Julien Sauvagnat, Jean-Noel Barrot, Maxime Bonelli, Basile Grassi, Groupement de Recherche et d'Etudes en Gestion à HEC (GREGH), Ecole des Hautes Etudes Commerciales (HEC Paris)-Centre National de la Recherche Scientifique (CNRS), Bocconi University [Milan, Italy], Toulouse School of Economics (TSE), École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS)-Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées, and HEC Paris Research Paper Series
- Subjects
History ,JEL: E - Macroeconomics and Monetary Economics/E.E3 - Prices, Business Fluctuations, and Cycles/E.E3.E32 - Business Fluctuations • Cycles ,Polymers and Plastics ,Coronavirus disease 2019 (COVID-19) ,Exploit ,media_common.quotation_subject ,Context (language use) ,Health outcomes ,Industrial and Manufacturing Engineering ,JEL: I - Health, Education, and Welfare/I.I1 - Health/I.I1.I18 - Government Policy • Regulation • Public Health ,Non-essential businesses ,0502 economics and business ,Pandemic ,050207 economics ,Business and International Management ,media_common ,JEL: H - Public Economics/H.H1 - Structure and Scope of Government ,050208 finance ,Earnings ,05 social sciences ,Causal effect ,Closing (real estate) ,Business closures ,JEL: I - Health, Education, and Welfare/I.I1 - Health/I.I1.I10 - General ,[SHS.GESTION]Humanities and Social Sciences/Business administration ,Demographic economics ,Business ,Covid-19 - Abstract
We estimate the causal effect of state-mandated business closures on economic and health outcomes in the context of the COVID-19 crisis in the US. We first show that business closures lead to a substantial drop in sales, earnings, and market values for affected firms. We then exploit sectoral variations in exposure to these restrictions across areas within the same state, and show that locking down 10% of the labor force is associated with a significant contraction in employment, but allows to reduce COVID-19 weekly infection and death rates by respectively 0.023 and 0.0015 percentage points. The findings translate into 24,000 saved lives for a cost of $115 billion. Finally, our empirical analysis suggests that the cost per life saved associated to business closures could have been significantly reduced if restrictions had targeted areas with intense workplace interactions
- Published
- 2020