Assessing the Economic Impact of Lockdowns in Italy: A Computational Input–Output Approach

Abstract

We build a novel interregional computational input–output model to assess the economic impact of lockdowns in Italy. Lockdowns are modeled as shocks to labor supply, calibrated on regional and sectoral employment data coupled with the prescriptions of government decrees. When estimated on data from the first lockdown, our model closely reproduces the observed economic dynamics during spring 2020. We also show that the model delivers a good out-of-sample performance during fall and winter 2020 and demonstrate that it can be used to analyze counterfactual scenarios.

How does the Covid‐19 pandemic affect regional labor markets and why do large cities suffer most?

“…Other industries in large cities might also be impaired via spillovers as sector-specific shocks may propagate through localized input-output linkages. Reissl et al (2022) and Inoue et al (2021), for instance, provide evidence that adverse effects of (local) lockdowns are transmitted through domestic value chains to other parts of the regional economy, which are not directly affected by containment measures. Our results do not imply that workers in working-from-home jobs experienced excess transitions into unemployment, but rather that the absence of commuting into city centers led to a loss of employment in retail sales or hospitality jobs that spreads out to the local economy.…”

Economic Impacts of Natural Hazards and Complexity Science: A Critical Review

“…Shocks to both were indeed one of the peculiarities of the COVID-19 pandemic recession. Recently, Pichler and Farmer (2021) and Reissl et al (2022) have stressed the relevance of their joint interaction in an IO framework, as well as the importance of a network representation of industries, which might propagate shocks further. In this spirit, we echo Pichler and Farmer (2021), who underline the necessity to fully incorporate these dynamics in the analysis of natural disaster impacts.…”

Supply chain loss from easing COVID-19 restrictions: an evolutionary economic-epidemiological modelling study

“…Owing to the scarcity of extensive firm-level supply-chain data, firm-level models rely on hypothetical firm networks or are restricted to the supply-chain network featuring a few industries or firms. To simulate and estimate the effects of pandemic-induced disruptions on large-scale supply-chain networks and the economy, adaptive economic models based on inter-sector input-output tables have been widely used as alternatives [16,[52][53][54][55][56][57][58].…”