European Business Schools Librarian's Group
HEC Research Papers Series,
HEC Paris
No 1374: Costs and Benefits of Closing Businesses in a Pandemic
Jean-Noel Barrot, Maxime Bonelli, Basile Grassi and Julien Sauvagnat
Additional contact information
Jean-Noel Barrot: HEC Paris
Maxime Bonelli: London Business School - Department of Finance
Basile Grassi: Bocconi University - Department of Economics; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research; Centre for Economic Policy Research (CEPR)
Julien Sauvagnat: Bocconi University; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research
Abstract: We study whether state-level mandatory business closures implemented in response to the outbreak of the Covid-19 causally affect economic and health outcomes. Using plausibly exogenous variations in exposure to these restrictions, we find that they impose substantial losses to firms and workers, the former bearing approximately two thirds of the cost, consistent with firms partially insuring their workers. We show that mandatory business closures have a significant negative causal effect on mortality rates, particularly in areas featuring contact-intensive occupations. We discuss the assumptions under which the health benefits of business closures exceed their associated economic costs.
Keywords: COVID-19; pandemic; business closures; non-essential businesses
89 pages, May 13, 2020
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