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Sectoral Effects of Social Distancing

Author

Listed:
  • Barrot, Jean-Noel

    (HEC Paris)

  • Grassi, Basile

    (Bocconi University - Department of Economics; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research; Centre for Economic Policy Research (CEPR))

  • Sauvagnat, Julien

    (Bocconi University; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research)

Abstract

The health crisis caused by the outbreak of the COVID-19 virus has led many countries to implement drastic social distancing rules. By reducing the quantity of labor, social distancing in turn leads to a drop in output which is difficult to quantify without taking into account relationships between sectors. Starting from a standard model of production networks, we analyze the sectoral effects of the shock in the case of France. We estimate that six weeks of social distancing brings GDP down by 5.6%. Apart from sectors directly concerned by social distancing mesures, those whose value added decreases the most are upstream sectors, i.e. sectors most distant from final demand. The same exercise is carried out for other European countries, taking into account national differences in sectoral composition and propensity to telework. Finally, we analyze the economic impact of selectively phasing out social distancing by sector, region or age group.

Suggested Citation

  • Barrot, Jean-Noel & Grassi, Basile & Sauvagnat, Julien, 2020. "Sectoral Effects of Social Distancing," HEC Research Papers Series 1371, HEC Paris.
    • Handle: RePEc:ebg:heccah:1371
    DOI: 10.2139/ssrn.3569446
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    Keywords

    COVID-19; social distancing; production networks;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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