Download This PaperGlobal Evidence on the Economic Effects of Disease Suppression During COVID-19
56 Pages Posted: 9 Aug 2021 Last revised: 3 Jan 2024
Date Written: February 10, 2023
Abstract
The restrictions to mobility and economic activity put in place by national governments to contain the spread of the coronavirus presumably saved many lives, but the economic crisis precipitated by these restrictions also had significant economic effects on households around the globe. Using Gallup World Poll data from 321,000 randomly selected adults in 117 countries/territories, representing nearly three quarters of the world’s population, this study presents the first global analysis of the welfare impacts of the restrictions to mobility and economic activity. Taking advantage of data that links COVID-19 directly to job and income losses as well as broader self-reported measures of pandemic impacts, we find that loss of subjective-well-being is closely linked to a COVID-related harm index. Moreover, policies aimed at restricting economic activity were associated with higher average levels of economic harm across countries. A one-standard deviation increase in stringency predicts a 0.28 standard deviation increase in economic harm, which corresponds to a three-percentage point increase in the share of workers experiencing the loss of a job or income resulting from the pandemic. These results are supported by several robustness checks and validation exercises. A decomposition shows that stay-at-home orders, school closings, and domestic travel restrictions were strongly associated with economic harm, but other non-pharmaceutical interventions—isolating the elderly, contact tracing, and mask requirements—were not. Furthermore, we show that economic inequality—measured by the incidence of income and job losses---increased in countries with more stringent policies. Within countries, households in the bottom of the income distribution, or those with lower levels of education, report much greater job and income losses than more affluent households, and this socio-economic status gap in harm widens as the stringency of COVID policies increases.
Keywords: COVID-19; job loss; development economics, international economics, non-pharmaceutical interventions
JEL Classification: O11, J2, I18
Suggested Citation: Suggested Citation