Abstract
In this paper, we study the impact of the COVID-19 vaccination on the COVID-19 cases and deaths by applying the instrumental variable estimator to spatial regression models and data of US counties for the period of January 01, 2021, to November 15, 2021. We document robust evidence of significant spatial effects in both the dependent and the main explanatory variables of interest. For the whole period considered in this study, the COVID-19 vaccination was found to significantly increase the COVID-19 infection and death ratios in the total county population. This result is caused by two opposite effects of the COVID-19 vaccination of two age groups. Specifically, the COVID-19 vaccination of county population aged 65 and below significantly increased the county COVID-19 infection and death ratios while the COVID-19 vaccination of county population aged over 65 significantly reduced them. The finding of strong opposite effects suggests that the moral hazard issue is disproportionally worse among vaccinated and probably unvaccinated group of young people, which might cause a surge of the COVID-19 cases and deaths in the period leading to the herd immunity. Finally, we also find that while remaining significant for the period between January 01 and November 15, 2021, the moral hazard-related impact of the COVID-19 vaccination was substantially decreasing over time as the COVID-19 vaccine coverage increased.
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