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Business disruptions from social distancing

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  • Mikl'os Koren
  • Rita PetH{o}

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 49 million workers work in occupations that rely heavily on face-to-face communication or require close physical proximity to other workers. Our model suggests that when businesses are forced to reduce worker contacts by half, they need a 12 percent wage subsidy to compensate for the disruption in communication. Retail, hotels and restaurants, arts and entertainment and schools are the most affected sectors. Our results can help target fiscal assistance to businesses that are most disrupted by social distancing.

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  • Mikl'os Koren & Rita PetH{o}, 2020. "Business disruptions from social distancing," Papers 2003.13983, arXiv.org.
  • Handle: RePEc:arx:papers:2003.13983
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    Cited by:

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    4. Aum, Sangmin & Lee, Sang Yoon (Tim) & Shin, Yongseok, 2020. "Who Should Work from Home during a Pandemic? The Wage-Infection Trade-off," CEPR Discussion Papers 15332, C.E.P.R. Discussion Papers.
    5. 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.
    6. Dingel, Jonathan I. & Neiman, Brent, 2020. "How many jobs can be done at home?," Journal of Public Economics, Elsevier, vol. 189(C).
    7. Mauro Caselli & Andrea Fracasso & Sergio Scicchitano, 2020. "From the lockdown to the new normal: An analysis of the limitations to individual mobility in Italy following the Covid-19 crisis," Discussion Paper series in Regional Science & Economic Geography 2020-07, Gran Sasso Science Institute, Social Sciences, revised Oct 2020.
    8. 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).
    9. 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.
    10. 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.
    11. 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).
    12. 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.
    13. 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).
    14. 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.
    15. Marco Pagano & Christian Wagner & Josef Zechner, 2020. "Disaster Resilience and Asset Prices," Papers 2005.08929, arXiv.org, revised May 2020.
    16. 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.
    17. 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.
    18. 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.
    19. 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.
    20. 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.
    21. 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).
    22. 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).
    23. 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.

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