COVID-19 and beyond: economic outcomes in Republican vs. Democratic States

Abstract

ABSTRACT The policy responses by state and local governments and reactions by individuals to the outbreak of the COVID-19 pandemic were wide-ranging across the US, often falling along the nation’s political divide. We examine whether Republican states performed better economically, both during the year of the COVID-19 recession and the two years following the recession. We find stronger employment and population growth and smaller increases in unemployment during the COVID-19 recession year in Republican states, though we also find lower per capita income and productivity growth in Republican states during the year of the COVID-19 recession. The employment growth and unemployment advantage in Republican states dissipated during the recovery from the COVID-19 recession such that there was not any longer-term advantage. We compare the COVID-19 and Great Recession years and the periods preceding each recession. The population growth advantage in Republican states during the COVID-19 recession was evident in all expansionary and recessionary periods beginning in 2003, suggesting that the growth advantage was not related to different responses to COVID-19. We conclude that there was not a clear overall economic benefit to the less restrictive COVID-19 policies and lower virus avoidance by individuals in Republican states, particularly in the longer run.