The “Great Lockdown”: Inactive Workers and Mortality by Covid-19

In response to the Covid-19 outbreak the Italian Government imposed an economic lockdown on March 22, 2020 and ordered the closing of all non-essential economic activities. This paper estimates the causal effects of this measure on mortality by Covid-19 and on mobility patterns. The identification of the causal effects exploits the variation in the active population across municipalities induced by the economic lockdown. The difference-in-differences empirical design compares outcomes in municipalities above and below the median variation in the share of active population before and after the lockdown within a province, also controlling for municipality-specific dynamics, daily-shocks at the provincial level and municipal unobserved characteristics. Our results show that the intensity of the economic lockdown is associated with a statistically significant reduction in mortality by Covid-19 and, in particular, for age groups between 40-64 and older (with larger and more significant effects for individuals above 50). Back of the envelope calculations indicate that 4,793 deaths were avoided, in the 26 days between April 5 to April 30, in the 3,518 municipalities which experienced a more intense lockdown. Several robustness checks corroborate our empirical findings.