Holy Days, Lost Days?

Do public holidays affect economic output? In Germany, strict Sunday trading restrictions create a natural experiment. When public holidays fall on Sundays, they typically do not impose additional constraints on business activity. I exploit this institutional feature to identify the economic cost of a lost workday using variation across states and years. Based on monthly manufacturing data and a stacked event study design, I find that weekday public holidays lead to modest but statistically significant reductions in output. Extrapolating the estimates implies annual GDP losses between 0.055 % and 0.28 %, depending on whether the effect is assumed to apply only to manufacturing or to the entire economy.