ECB Economic Bulletin, Issue 1/2021.
Monday 15 February 2021, by Carlos San Juan
This box examines the drivers of intra-country regional differences in the economic impact of the coronavirus (COVID-19), as observed in the four largest euro area economies during the initial phase of the pandemic. More specifically, it discusses the role played by sectoral structure and trade linkages in explaining the difference in terms of how COVID-19 affects the regions within these countries economically.
During the first phase of the pandemic, the economic impact of the crisis was evident in severe labour market disruptions, affecting local labour markets to varying degrees. The number of employees in short-time work schemes, one of the main policy tools used to contain lay-offs, spiked dramatically in France, Germany, Italy and Spain during the first wave of the COVID-19 pandemic.
These spikes were characterised by significant regional variations, displaying a pattern that did not fully mirror the intra-country geographical distribution of the disease (Chart A), highlighting the need to identify the other factors at play.