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Business disruptions from social distancing

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  • Miklós Koren
  • Rita Pető

Abstract

Social distancing interventions can be effective against epidemics but are potentially detrimental for the economy. Businesses that rely heavily on face-to-face communication or close physical proximity when producing a product or providing a service are particularly vulnerable. There is, however, no systematic evidence about the role of human interactions across different lines of business and about which will be the most limited by social distancing. Here we provide theory-based measures of the reliance of U.S. businesses on human interaction, detailed by industry and geographic location. We find that, before the pandemic hit, 43 million workers worked in occupations that rely heavily on face-to-face communication or require close physical proximity to other workers. Many of these workers lost their jobs since. Consistently with our model, employment losses have been largest in sectors that rely heavily on customer contact and where these contacts dropped the most: retail, hotels and restaurants, arts and entertainment and schools. Our results can help quantify the economic costs of social distancing.

Suggested Citation

  • Miklós Koren & Rita Pető, 2020. "Business disruptions from social distancing," PLOS ONE, Public Library of Science, vol. 15(9), pages 1-14, September.
  • Handle: RePEc:plo:pone00:0239113
    DOI: 10.1371/journal.pone.0239113
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    2. Andrea Bellucci & Alexander Borisov & Gianluca Gucciardi & Alberto Zazzaro, 2020. "The Reallocation Effects of COVID-19: Evidence from Venture Capital Investments around the World," Mo.Fi.R. Working Papers 167, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    3. Beland, Louis-Philippe & Brodeur, Abel & Wright, Taylor, 2020. "COVID-19, Stay-at-Home Orders and Employment: Evidence from CPS Data," GLO Discussion Paper Series 559, Global Labor Organization (GLO).
    4. Mohit Sharma & Sargam Gupta & Xavier Estupinan, 2020. "An alternate to survey methods to measure work from home," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2020-028, Indira Gandhi Institute of Development Research, Mumbai, India.
    5. Marco Pagano & Christian Wagner & Josef Zechner, 2020. "Disaster Resilience and Asset Prices," Papers 2005.08929, arXiv.org, revised May 2020.
    6. Kangoh Lee, 2021. "Pandemics, Mitigation Measures, and Environment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(2), pages 353-374, February.
    7. Gopalakrishnan, Balagopal & Jacob, Joshy & Mohapatra, Sanket, 2021. "Government responses, business continuity, and management sentiment: Impact on debt financing during COVID-19," IIMA Working Papers WP 2021-04-03, Indian Institute of Management Ahmedabad, Research and Publication Department.
    8. Crowley, Frank & Daly, Hannah & Doran, Justin & Ryan, Geraldine & Caulfield, Brian, 2021. "The impact of labour market disruptions and transport choice on the environment during COVID-19," Transport Policy, Elsevier, vol. 106(C), pages 185-195.
    9. Julian Kozlowski & Laura Veldkamp & Venky Venkateswaran, 2020. "Scarring Body and Mind: The Long-Term Belief-Scarring Effects of COVID-19," NBER Working Papers 27439, National Bureau of Economic Research, Inc.
    10. R Maria del Rio-Chanona & Penny Mealy & Anton Pichler & François Lafond & J Doyne Farmer, 2020. "Supply and demand shocks in the COVID-19 pandemic: an industry and occupation perspective," Oxford Review of Economic Policy, Oxford University Press, vol. 36(Supplemen), pages 94-137.
    11. Dingel, Jonathan I. & Neiman, Brent, 2020. "How many jobs can be done at home?," Journal of Public Economics, Elsevier, vol. 189(C).
    12. Caselli, Mauro & Fracasso, Andrea & Scicchitano, Sergio, 2020. "From the lockdown to the new normal: An analysis of the limitations to individual mobility in Italy following the Covid-19 crisis," GLO Discussion Paper Series 683, Global Labor Organization (GLO).
    13. Köllő, János & Reizer, Balázs, 2021. "A koronavírus-járvány első hullámának hatása a foglalkoztatásra és a vállalatok árbevételére [The effect of the first wave of Covid pandemic on employment and firm revenue]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(4), pages 345-374.
    14. 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).
    15. Alipour, Jean-Victor & Fadinger, Harald & Schymik, Jan, 2021. "My home is my castle – The benefits of working from home during a pandemic crisis," Journal of Public Economics, Elsevier, vol. 196(C).
    16. Behrens, Kristian & Kichko, Sergey & Thisse, Jacques-François, 2021. "Working from home: Too much of a good thing?," CEPR Discussion Papers 15669, C.E.P.R. Discussion Papers.
    17. Michela Piccarozzi & Cecilia Silvestri & Patrizio Morganti, 2021. "COVID-19 in Management Studies: A Systematic Literature Review," Sustainability, MDPI, Open Access Journal, vol. 13(7), pages 1-28, March.
    18. Carbonero, Francesco & Scicchitano, Sergio, 2021. "Labour and technology at the time of Covid-19. Can artificial intelligence mitigate the need for proximity?," GLO Discussion Paper Series 765, Global Labor Organization (GLO).
    19. Blagica Petreski & Marjan Petreski & Bojan Srbinoski, 2020. "The potential of export-oriented companies to contribute to post-Covid-19 economic recovery in North Macedonia," Finance Think Policy Studies 2020-12/33, Finance Think - Economic Research and Policy Institute.
    20. Enghin Atalay & Shigeru Fujita & Sreyas Mahadevan & Ryan Michaels & Tal Roded, 2020. "Reopening the Economy: What Are the Risks, and What Have States Done?," Research Brief, Federal Reserve Bank of Philadelphia, July.
    21. Bonacini, Luca & Gallo, Giovanni & Scicchitano, Sergio, 2020. "All that glitters is not gold. Effects of working from home on income inequality at the time of COVID-19," GLO Discussion Paper Series 541, Global Labor Organization (GLO).
    22. Luca Bonacini & Giovanni Gallo & Sergio Scicchitano, 2021. "Working from home and income inequality: risks of a ‘new normal’ with COVID-19," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(1), pages 303-360, January.
    23. Greyling, Talita & Rossouw, Stephanie & Adhikari, Tamanna, 2020. "Happiness-lost: Did Governments make the right decisions to combat Covid-19?," GLO Discussion Paper Series 556, Global Labor Organization (GLO).

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