COVID-19: how much unemployment was caused by the shutdown in Germany?

This paper evaluates the short-term labour market impact of the COVID-19 containment measures in Germany. By assessing the treatment effect on unemployment via difference-in-difference estimation, we find that 60% of the considerably increased inflows from employment into unemployment in April 2020 were due to the shutdown measures. Disentangling further, we find that the hiring margin accounted for additional 82% of the unemployment effect coming from the separations margin. In sum, the shutdown measures increased unemployment in the short run by 117,000 persons.

Automated summary

The study evaluates the short-term impact of COVID-19 containment measures on the labor market in Germany, finding that the shutdown measures led to a significant increase in unemployment with 60% attributed to the measures. Further analysis shows that the hiring margin accounted for 82% of the unemployment effect. In total, the shutdown measures resulted in an increase of 117,000 persons in unemployment in the short term.