Closed for Business

Abstract

We investigate the effectiveness of business shutdowns to contain the Covid-19 disease. In March 2020, Italy shut down operations in a number of sectors. Using a difference-in-difference approach, we find that municipalities with higher exposure to closed sectors experience subsequently lower mortality rates. We estimate the resulting life savings to exceed 12.000 people over less than a month. Using estimates of remaining life-years, this translates into monetary benefits of 12 billion Euros We also show that business shutdowns exhibit rapidly diminishing returns and have effects outside the closed sectors and in other municipalities. This suggests that effective containment policies require central coordination.

Keywords: business shutdown, coordination, COVID-19, Pandemic

JEL Classification: H12, I18