When and how do business shutdowns work? Evidence from Italy’s first COVID-19 wave
Governments around the world have adopted unprecedented policies to deal with COVID-19.
This paper zooms in on business shutdowns and investigates their effectiveness in
reducing mortality. We leverage highly granular death registry data for almost 5,000
Italian municipalities in a diff-in-diff approach that allows us to mitigate endogeneity
concerns credibly. Our results, which are robust to controlling for a host of co-factors,
offer strong evidence that business shutdowns are very effective in reducing mortality.
We calculate that the death toll from the first wave of COVID-19 in Italy may have
been about twice as high in their absence. Our findings also highlight that timeliness
is key – by acting one week earlier, the death toll may have been reduced by up to
an additional 25%. Finally, shutdowns should be targeted. Closing service activities
with a high degree of interpersonal contact saves the most lives. Shutting down production
activities – while substantially reducing mobility – only has mild effects on mortality.
Published on April 13, 2021
In series:OECD Economics Department Working Papersview more titles