Cost-Benefit Analysis of COVID-19 Lockdowns

Abel Brodeur (University of Ottawa)

In this paper, we examine the cost-benefits of lockdowns in the U.S. We first document the impacts of lockdowns on labor market outcomes. Our estimates suggest that these policies increased unemployment by nearly 2.5 percentage points. We apply our estimates to compute lost income ($15.7-$26.9 billion), reduced government income tax revenues ($2.7-$4.6 billion), and increased unemployment insurance benefit payments ($20.8-$35.5 billion). We complement our analysis with estimates of COVID-19 impact from other studies on reduced COVID-19 incidence, hospitalizations, crime, air pollution and car collisions, and increased incidence of domestic violence. Our estimates suggest that it is unclear whether or not lockdowns are cost effective. We conclude with a discussion of other policies, such as mask mandates, which might be more efficient to face a COVID-19 second wave.