Economic Insights — To fight COVID-19, most states restricted business activity. At the same time, the nation experienced historic rates of job loss. How much of that loss was due to those restrictions?
To combat the onset of COVID-19, almost all state governments substantially restricted, if not outright prohibited, the operation of businesses in several industries. This article reviews the effect of these mitigation policies. In particular, it uses an event study framework (widely used in research about COVID-19) to measure the degree to which essential-business lists contributed to the historic rates of job loss. The effects of these policies vary somewhat across employment indicators, but, on balance, the results suggest that these policies increased job losses by 15–25 percent.
This article appeared in the First Quarter 2021 edition of Economic Insights. Download and read the full issue.