The External Effects of Local Lockdowns: Evidence from the US
The business restrictions introduced during the Covid-19 pandemic greatly affected the labour market. However, quantifying their costs is not trivial as local policies affect neighbouring areas through spillovers. Gabriele Guaitoli and Todor Tochev of Warwick University tell Tim Phillips about their work which exploits the US local variation in restrictions and commuting, to estimate the causal direct and spillover impacts of lockdowns. Spillovers alone account for 10-15% of U.S. job losses.