Abstract
This paper estimates how COVID-19 lockdown policies impacted economic activity. Using a difference-in-differences methodology, we establish the divergence of district-level nighttime light intensity, mobility and migration, as well as household-level income and consumption, across different containment zones across India. We find that nighttime light intensity was 9.3% lower in the post period (May to July 2020) for districts with the most severe restrictions, (which could imply between 12.4% and 18.6% lower GDP), and 1.5% lower for districts with intermediate restrictions, compared to districts with the least restrictions. The differences were largest in May during the graded lockdown, and slowly tapered in June and July. Lower household income and consumption are plausible channels for these results. Stricter containment measures had larger impacts in districts with greater population density, older residents, and more services employment. Our findings point to the role of pandemic containment policies on future economic growth and inequality.
Highlights
Epidemics and pandemics, including the Coronavirus Disease 2019 (COVID-19), have large impacts on human life and livelihoods
This paper estimates the impact of differential containment policies implemented by the Government of India (GoI) during the COVID-19 pandemic on aggregate economic activity
Using monthly data of man-made nighttime lights at the district level, we examine the impact of these differential relaxations of restrictions on aggregate economic activity
Summary
Epidemics and pandemics, including the Coronavirus Disease 2019 (COVID-19), have large impacts on human life and livelihoods. Using monthly data of man-made nighttime lights at the district level, we examine the impact of these differential relaxations of restrictions on aggregate economic activity. Using nighttime lights is appropriate for this study since this measure is available at high spatial granularity at monthly frequency.2 This allows us to match nighttime lights to the relevant district-level zone classification to determine economic activity in the pre-period in March and April, and to compare it to activity in the post-period in May, June, and July. Beyer et al (2020) employ state-level daily electricity consumption to assess the economic cost of the uniform lockdown during March and April 2020 in India and use monthly nighttime light intensity to explain drivers of district-level heterogeneity. Ravindran and Shah (2020) employ the same zone classification as we do to analyze its impact on gender-based violence and find that complaints are higher in districts with more severe restrictions
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