Closed for Business

32 Pages Posted: 28 May 2020

See all articles by Dion Bongaerts

Dion Bongaerts

Erasmus University Rotterdam (EUR) - Finance

Francesco Mazzola

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)

Wolf Wagner

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM); Centre for Economic Policy Research (CEPR)

Date Written: May 2020

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: business shutdown, coordination, COVID-19, Pandemic

JEL Classification: H12, I18

Suggested Citation

Bongaerts, Dion and Mazzola, Francesco and Wagner, Wolf, Closed for Business (May 2020). CEPR Discussion Paper No. DP14814, Available at SSRN: https://ssrn.com/abstract=3612885

Dion Bongaerts (Contact Author)

Erasmus University Rotterdam (EUR) - Finance ( email )

Burgemeester Oudlaan 50
Rotterdam, 3062PA
Netherlands
+31 (0) 10 40 82 790 (Phone)
+31 (0) 10 40 89 017 (Fax)

HOME PAGE: http://www.rsm.nl/portal/page/portal/home/faculty/academic_departments/finance/faculty_and_staff/fac

Francesco Mazzola

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands

Wolf Wagner

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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