Are Pandemics Bad for Business? Evidence From the US COVID-19 Experience
Main Article Content
Keywords
Mobility Restrictions, Unemployment Claims, Buisness Applications, Causal Inference, COVID-19
Abstract
The economic downturn caused by the COVID-19 contingency cannot be denied. Many authors have studied the effects of the sanitary emergency on labor force and the demand and supply of goods and services. This paper aims to understand the consequences of the shock to the economy caused by the pandemic, measured through mobility restrictions, in the business context. Using Google Mobility and The New York Times report, stay-at-home orders were used as a proxy for mobility restrictions. The effect of said restrictions on initial unemployment benefit claims and new business applications provides an insight into the change in people’s livelihoods. The difference-in-differences and event study methodologies were applied with data from 2010 to the third week of August 2020. The results indicate that the restrictions on mobility had a significant impact on both outcome variables. The effect on unemployment claims was still present at the time of this paper, while the behavior of new business applications was mostly affected for the first few weeks and then had a quick rebound.
Downloads
References
Bajardi, P., Poletto, C., Ramasco, J. J., Tizzoni, M., Colizza, V., & Vespignani, A. (2011). Human mobility networks, travel restrictions, and the global spread of 2009 h1n1 pandemic. PloS one, 6(1), e16591.
Baker, S. R., Bloom, N., Davis, S. J., & Terry, S. J. (2020). Covid-induced economic uncertainty (Tech. Rep.). National Bureau of Economic Research.
Bonaccorsi, G., Pierri, F., Cinelli, M., Flori, A., Galeazzi, A., Porcelli, F., ... others (2020). Economic and social consequences of human mobility restrictions under covid-19. Proceedings of the National Academy of Sciences, 117(27), 15530–15535.
Calí, M., & Miaari, S. H. (2013). The labor market impact of mobility restrictions: Evidence from the west bank. The World Bank.
CDC. (2020). The true burden of covid-19 in the US (Tech. Rep.). Center for Disease Control.
Census. (2020a). Business formation statistics (Tech. Rep.). US Census Bureau.
Census. (2020b). Household pulse survey data (Tech. Rep.). US Census Bureau.
Coibion, O., Gorodnichenko, Y., & Weber, M. (2020). The cost of the covid-19 crisis: Lockdowns, macroeconomic expectations, and consumer spending (Tech. Rep.). National Bureau of Economic Research.
DOL. (2020). Unemployment insurance weekly claims data (Tech. Rep.). US Department of Labor.
Espinoza, B., Castillo-Chavez, C., & Perrings, C. (2020). Mobility restrictions for the control of epidemics: When do they work? Plos one, 15(7), e0235731.
Faria-e Castro, M. (2020). Fiscal policy during a pandemic. FRB St. Louis Working Paper(2020-006).
Friedson, A. I., McNichols, D., Sabia, J. J., & Dave, D. (2020). Did California’s shelter-in-place order work? early coronavirus-related public health effects (Tech. Rep.). National Bureau of Economic Research.
Google. (2020). Covid-19 community mobility reports (Tech. Rep.).
Hsiang, S., Allen, D., Annan-Phan, S., Bell, K., Bolliger, I., Chong, T., ... others (2020). The effect of large-scale anti-contagion policies on the covid-19 pandemic. Nature, 584(7820), 262–267.
Jasmine C. Lee, Y. A. B. H., Sarah Mervosh, & Matthews, A. L. (2020). See how all 50 states are reopening (and closing again). The New York Times.
Article Sidebar
Article Details
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).