COVID-19 Vaccines: A Shot in Arm for the Economy

21 Pages Posted: 17 Feb 2022

See all articles by Niels-Jakob Hansen

Niels-Jakob Hansen

International Monetary Fund (IMF)

Rui C. Mano

International Monetary Fund

Date Written: December 1, 2021

Abstract

We quantify the effect of vaccinations on economic activity in the United States using weekly county level data covering the period end-2020 to mid-2021. Causal effects are identified through instrumenting vaccination rates with county-level pharmacy density interacted with state-level vaccine allocations, and by including county and state-time fixed effects to control for unobserved factors. We find that vaccinations are a significant and substantial shot in the arm of the economy. Specifically, an increase of initiated vaccination rates of 1 percentage point increases weekly consumer spending by 0.6 percent and reduces weekly initial unemployment claims by 0.004 percentage points of the 2019 labor force. Vaccinations also increase workrelated mobility. Importantly, we find that the effects vary with county characteristics. Specifically, urban counties and counties with initially worse socioeconomic conditions and lower education levels exhibit larger effects of vaccinations. This way, vaccinations are also a fair shot in the arm for the economy, which highlights that equitable distribution of vaccines is important to reduce inequality. Our results are specific to the United States, but hold important lessons for the expected economic impact of vaccinations in other countries.

Keywords: COVID-19, pandemics, vaccinations.

JEL Classification: E52, E58, D43, L11

Suggested Citation

Hansen, Niels-Jakob and Mano, Rui C., COVID-19 Vaccines: A Shot in Arm for the Economy (December 1, 2021). IMF Working Paper No. 2021/281, Available at SSRN: https://ssrn.com/abstract=4026511

Niels-Jakob Hansen (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Rui C. Mano

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

HOME PAGE: http://sites.google.com/site/ruimano/

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
42
Abstract Views
226
PlumX Metrics