What Happened to the US Economy during the 1918 Influenza Pandemic? A View Through High-Frequency Data

An economic downturn coincided with the start of the epidemic but the recession was short and moderate, compared with that of 1920/21. Cross-sectional high-frequency data indicate that the epidemic affected the labor supply sharply but briefly with no ensuing spill-overs; most of the recession, brief as it was, was due to the end of the war. I analyze weekly city-level mortality data and economic indicators with time series methods and structural estimation of an economic-epidemiological model: interventions to hinder the contagion reduced mortality at little economic cost, probably because reduced infections mitigated the impact on the labor force.

Automated summary

This study finds that the impact of the epidemic on the economy was short and moderate compared to the recession of 1920/21. The epidemic had a sharp but brief effect on labor supply, with no subsequent spill-overs. The majority of the recession, despite its brevity, was attributed to the end of the war. Interventions to hinder the contagion reduced mortality with little economic cost, likely due to reduced infections mitigating the impact on the labor force.