A synthetic control analysis of U.S. state level COVID-19 stay-at-home orders on new jobless claims

There is an ongoing debate regarding the economic consequences of public policies designed to curb public health crises, such as the COVID-19 pandemic. Many opponents of such policies claim that their economic costs may outweigh their health benefits. In this paper, we use synthetic control analysis to determine the impact of stay-at-home orders on weekly new jobless claims during the initial phase of the COVID-19 pandemic. Our analysis reveals that while new jobless claims spike following the stay-at-home orders, similar spikes are observed within our synthetic control. Specifically, we find that stay-at-home orders account for only 32 percent of the increase in new jobless claims, with the majority of the increase being driven by factors outside of the policy, such as the general spread of the virus and waning consumer confidence.