Understanding the Economic Impact of COVID-19 Stay-at-Home Orders: A Synthetic Control Analysis

8 Pages Posted: 19 May 2020

See all articles by John Gibson

John Gibson

University of Texas at El Paso

Xiaojin Sun

University of Texas at El Paso

Date Written: May 14, 2020

Abstract

There is an ongoing debate in the U.S. regarding the costs and benefits associated with statewide stay-at-home orders that were enacted in response to the COVID-19 outbreak. Many opponents of such orders claim that the economic cost, in terms of higher unemployment, may in-fact outweigh the health benefits of such policies. In this paper, we use synthetic control analysis to determine the impact of stay-at-home orders on weekly new jobless claims. Our analysis reveals that while new jobless claims spike following stay-at-home orders, similar spikes, albeit of a lower magnitude, are also observed within our synthetic control. This finding suggests that other factors outside of the policy, such as the spread of the virus and a general waning of consumer confidence, contribute significantly to the observed increase in new jobless claims.

Keywords: Synthetic Control Analysis, COVID-19, Lockdown Orders, Jobless Claims

JEL Classification: J64, J68, D61

Suggested Citation

Gibson, John and Sun, Xiaojin, Understanding the Economic Impact of COVID-19 Stay-at-Home Orders: A Synthetic Control Analysis (May 14, 2020). Available at SSRN: https://ssrn.com/abstract=3601108 or http://dx.doi.org/10.2139/ssrn.3601108

John Gibson

University of Texas at El Paso ( email )

University Library - Acquisitions Department
500 West University Avenue
El Paso, TX 79968
United States

Xiaojin Sun (Contact Author)

University of Texas at El Paso ( email )

University Library - Acquisitions Department
500 West University Avenue
El Paso, TX 79968
United States

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