Infectious disease control and its economic gains in a pandemic: the case of South Korea

Abstract

We investigate the role of the infectious disease control (IDC) system in curbing the spread of infectious disease and preventing economic damage during the COVID-19 pandemic. To this end, we propose incorporating a clustering analysis into the synthetic control method. This contributes to constructing a homogeneous donor pool, which is necessary for an unbiased treatment effect estimator. South Korea’s effective IDC system, the so-called K-Quarantine, is estimated to have reduced the number of disease infections and to have prevented a 3.6% loss of GDP and a 0.3%p rise in the unemployment rate in South Korea in 2020. These results are robust in an alternative reduced-form regression analysis under various specifications.