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Bodenstein, M., Corsetti, G. and Guerrieri, L.

Economic and Epidemiological Effects of Mandated and Spontaneous Social Distancing

WP Number: 2110

Abstract: Based on a standard epidemiological model, we derive and apply empirical tests of the hypothesis that contacts, as proxied by mobility data, have an effect on the spread of the coronavirus epidemic, as summarized by the reproduction rates, and on economic activity, as captured by subsequent initial claims to unemployment benefits. We show that changes in mobility through the first quarters of 2020, be it spontaneous or mandated, had significant effects on both the spread of the coronavirus and the economy. Strikingly, we find that spontaneous social distancing was no less costly than mandated social distancing. Our results suggest that the rebound in economic activity when stay-at-home orders were lifted was primarily driven by the improvement in epidemiological parameters. In other words, without the reduction in the reproduction rate of the coronavirus, we could have expected a doubling down on spontaneous social distancing.

Keywords: infectious disease, epidemic, recession, COVID-19

JEL Codes: E10 E30 I10

Author links: Giancarlo Corsetti  

PDF: wp2110.pdf

Open Access Link: 10.17863/CAM.65420

Theme: transmission