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The unemployment effects of closing the non-essential activities during the COVID-19 lockdown: The case of 8,108 Spanish municipalities

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  • Serra, Laura
  • Silva, José I.
  • Vall·llosera, Laura

Abstract

We study the labour market impact of the confinement measures implemented in Spain to halt the spread of the COVID-19 pandemic in the first quarter of 2020. We use data from 8,108 municipalities to quantify the short-term impact of the temporary shutdown of non-essential activity on local unemployment rates. Ordinary least squares regressions show that an increment of 10 percentage points in the share of firms with non-essential activities increases the unemployment rate between 0.08 and 0.22 percentage points, depending on the population size of the municipalities. We only find this positive effect in municipalities above 2,395 inhabitants. The lockdown explains around 50% of the observed increase in the unemployment rates of these municipalities. We also look at the impact by gender and age and find that the lockdown of these activities affects males and workers between 25 and 45 years old by relatively more.

Suggested Citation

  • Serra, Laura & Silva, José I. & Vall·llosera, Laura, 2022. "The unemployment effects of closing the non-essential activities during the COVID-19 lockdown: The case of 8,108 Spanish municipalities," MPRA Paper 112138, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:112138
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    References listed on IDEAS

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    1. Palomino, Juan C. & Rodríguez, Juan G. & Sebastian, Raquel, 2020. "Wage inequality and poverty effects of lockdown and social distancing in Europe," European Economic Review, Elsevier, vol. 129(C).
    2. Abel Brodeur & David Gray & Anik Islam & Suraiya Bhuiyan, 2021. "A literature review of the economics of COVID‐19," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1007-1044, September.
    3. Christian Dreger & Daniel Gros, 2021. "Lockdowns and the US Unemployment Crisis," Economics of Disasters and Climate Change, Springer, vol. 5(3), pages 449-463, October.
    4. Kong, Edward & Prinz, Daniel, 2020. "Disentangling policy effects using proxy data: Which shutdown policies affected unemployment during the COVID-19 pandemic?," Journal of Public Economics, Elsevier, vol. 189(C).
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    1. Fernandes, Mário Correia & Dutra, Tiago Mota & Dias, José Carlos & Teixeira, João C.A., 2023. "Modelling output gaps in the Euro Area with structural breaks: The COVID-19 recession," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 1046-1058.

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    More about this item

    Keywords

    COVID-19; lockdown; unemployment; non-essential activities; municipalities;
    All these keywords.

    JEL classification:

    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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