Unemployment Effects of Stay-at-Home Orders: Evidence from High-Frequency Claims Data

ChaeWon Baek, Peter B. McCrory, Todd Messer and Preston Mui
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ChaeWon Baek: Tufts University
Peter B. McCrory: J.P. Morgan Chase
Todd Messer: Federal Reserve Board
Preston Mui: University of California, Berkeley

The Review of Economics and Statistics, 2021, vol. 103, issue 5, 979-993

Abstract: We use the high-frequency, decentralized implementation of stay-at-home (SAH) orders in the United States to disentangle the labor market effects of SAH orders from the general economic disruption wrought by the COVID-19 pandemic. We find that each week of SAH exposure increased a state's weekly initial unemployment insurance (UI) claims by 1.9% of its employment level relative to other states. A back-of-the-envelope calculation implies that of the 17 million UI claims between March 14 and April 4, only 4 million were attributable to SAH orders. We present a currency union model to provide conditions for mapping this estimate to aggregate employment losses.

Date: 2021
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