Two Approaches to Saving the Economy: Micro-Level Effects of Covid-19 Lockdowns in Italy

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

No 2023-01, JRC Working Papers in Economics and Finance from Joint Research Centre, European Commission

Abstract: In response to the two waves of Covid-19 in 2020, the Italian government implemented a general lockdown in March, but geographically targeted policies during fall. We exploit this natural experiment to compare the effects of the two policies in a difference-in-differences design, leveraging a unique database combining traditional, municipality-level and big data at weekly frequency. We find that the general lockdown of the first wave strongly reduced mobility at a high price in terms of employment, while the targeted policies during the second wave induced a lower decrease in mobility and little additional economic cost. We also study the role of pre-existing municipality characteristics and labour market policies in shaping these responses. Our results suggest that working from home and short-term work schemes buffered the adverse consequences of the drop in economic activity on the labour market. Both mechanisms, however, acted more strongly in high-income areas and among white collar workers, exacerbating existing inequalities.

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)
Pages: 43 pages
Date: 2023-02
New Economics Papers: this item is included in nep-big, nep-eur, nep-hea, nep-lab and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:jrs:wpaper:202301

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