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A synthetic control analysis of U.S. state level COVID-19 stay-at-home orders on new jobless claims

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Listed:
  • John Gibson

    (University of Texas at El Paso)

  • Xiaojin Sun

    (University of Texas at El Paso)

Abstract

There is an ongoing debate regarding the economic consequences of public policies designed to curb public health crises, such as the COVID-19 pandemic. Many opponents of such policies claim that their economic costs may outweigh their health benefits. In this paper, we use synthetic control analysis to determine the impact of stay-at-home orders on weekly new jobless claims during the initial phase of the COVID-19 pandemic. Our analysis reveals that while new jobless claims spike following the stay-at-home orders, similar spikes are observed within our synthetic control. Specifically, we find that stay-at-home orders account for only 32 percent of the increase in new jobless claims, with the majority of the increase being driven by factors outside of the policy, such as the general spread of the virus and waning consumer confidence.

Suggested Citation

  • John Gibson & Xiaojin Sun, 2023. "A synthetic control analysis of U.S. state level COVID-19 stay-at-home orders on new jobless claims," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 47(1), pages 1-14, March.
    • Handle: RePEc:spr:jecfin:v:47:y:2023:i:1:d:10.1007_s12197-022-09604-9
    DOI: 10.1007/s12197-022-09604-9
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    References listed on IDEAS

    as
    1. ChaeWon Baek & Peter B. McCrory & Todd Messer & Preston Mui, 2021. "Unemployment Effects of Stay-at-Home Orders: Evidence from High-Frequency Claims Data," The Review of Economics and Statistics, MIT Press, vol. 103(5), pages 979-993, December.
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    3. Andrew I. Friedson & Drew McNichols & Joseph J. Sabia & Dhaval Dave, 2020. "Did California’s Shelter-in-Place Order Work? Early Coronavirus-Related Public Health Effects," NBER Working Papers 26992, National Bureau of Economic Research, Inc.
    4. Mark Partridge & Dan Rickman, 1997. "The Dispersion of US State Unemployment Rates: The Role of Market and Non-market Equilibrium Factors," Regional Studies, Taylor & Francis Journals, vol. 31(6), pages 593-606.
    5. Shaowen Luo & Kwok Ping Tsang, 2020. "China And World Output Impact Of The Hubei Lockdown During The Coronavirus Outbreak," Contemporary Economic Policy, Western Economic Association International, vol. 38(4), pages 583-592, October.
    6. Alberto Abadie, 2021. "Using Synthetic Controls: Feasibility, Data Requirements, and Methodological Aspects," Journal of Economic Literature, American Economic Association, vol. 59(2), pages 391-425, June.
    7. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
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    More about this item

    Keywords

    Synthetic control analysis; COVID-19; Lockdown orders; Jobless claims;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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