Unemployment Effects of Stay-at-Home Orders: Evidence from High Frequency Claims Data


Without effective mitigation strategies, epidemiological models project that upwards of 2 million Americans are at risk of death from the coronavirus pandemic, with many more subject to uncertain health complications. Heeding the warning, in mid-March 2020, state and local officials in the United States began issuing Stay-at-Home (SAH) orders, instructing people to remain at home except to do essential tasks or to do work deemed essential. By April 4th, 2020, nearly 95% of the U.S. population was under such directives. Over the same three week period, initial claims for unemployment spiked to unprecedented levels. In this paper, we use the high-frequency, decentralized implementation of SAH policies, along with high-frequency unemployment insurance (UI) claims, to disentangle the local effect of SAH policies from the general economic disruption wrought by the pandemic that affected all regions similarly. We find that, all else equal, each employment-weighted week of Stay-at-Home exposure increased a state’s weekly initial UI claims by 1.9% of its employment level. Ignoring cross-regional spillovers, this finding implies that, of the 16 million UI claims made between March 14, 2020 and April 4, 2020, only 4 million are attributable to the Stay-at-Home directives. This evidence suggests that the direct effect of SAH orders accounted for a significant, but minority share of the overall rise in unemployment claims, and that the majority of the rise in unemployment during this period would have occurred in the absence of these orders. This suggests that any economic recovery that arises from undoing SAH orders will be limited if the underlying pandemic is not resolved.