The economic impact of general vs. targeted lockdowns: New insights from Italian municipalities

Zsombor Cseres-Gergely, Valentin Kecht, Julia Le Blanc and Luca Onorante

Economic Modelling, 2024, vol. 134, issue C

Abstract: In response to COVID-19, most governments implemented either general or geographically targeted lockdowns. While the contractionary effects of general lockdowns have been well-documented, this paper is the first to contrast the economic impacts of the two approaches in a quasi-experimental setting. To this aim, we construct a high-frequency database combining unique information from mobile devices and administrative data across Italian municipalities. Using difference-in-differences approaches, our results confirm that general lockdowns considerably reduced mobility and employment, but we also find that localised measures only led to modest declines in mobility with minimal additional impact on employment. Focusing on the distributional consequences, we show that economic activity decreased less in wealthier communities with a higher capacity for telework. Moreover, short-time work schemes, serving as automatic stabilizers, predominantly benefited affluent areas. We conclude that an optimal policy mix involves targeted lockdown measures, complemented by adequate social policies and infrastructure investment.

Keywords: COVID-19; Human mobility; Lockdowns; Big data; Differences-in-differences (search for similar items in EconPapers)
JEL-codes: C33 D04 H12 H51 I12 I18 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:134:y:2024:i:c:s0264999324000592

DOI: 10.1016/j.econmod.2024.106703

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