The unemployment effects of closing non-essential activities during the COVID-19 lockdown: The Spanish municipalities

Abstract

We study the labour market impact of the confinement measures implemented in Spain to halt the spread of the COVID-19 pandemic in the first quarter of 2020. We use data from 8,108 municipalities to quantify the impact of the shutdown of non-essential activity on local unemployment. Ordinary least squares regressions show that an increment of 10 percentage points in the share of firms performing non-essential activities increased the unemployment- population ratio by between 0.032 and 0.148 percentage points. We only find this positive effect in municipalities with more than 2,395 inhabitants. The lockdown explains between 25% and 40% of the observed increase in the unemployment within these municipalities. We also look at the impact of the lockdown by gender and age, and find that the impact of these closures was felt relatively more by males and workers above 45 years old