Mobility Before Government Restrictions in the Wake of COVID-19
34 Pages Posted: 20 Jul 2021 Last revised: 21 Sep 2021
Date Written: April 29, 2021
During the first wave of COVID-19 in Europe, people’s retail and recreation mobility, a high-frequency proxy for consumption, correlated negatively with the increase in the number of COVID-19 daily cases. We propose a new identification strategy to assess how much of the drop in retail mobility was driven by the arrival of bad epidemiological news, represented by the reported daily new cases. In particular, we exploit the time span between the first reported COVID-19 infection in a country and the implementation of a nationwide stay-at-home order. As during this period people were free to move, we argue that this approach allows us to disentangle the role of virus fear from that of restriction in the observed mobility reduction. We find that a 1% increase in daily cases reduces retail mobility by approximately 0.02%, a sizable effect in the context of the first wave of the pandemic. This suggests that the epidemic affects household spending and economic activity, even in the absence of mandatory mobility restrictions.
Keywords: COVID-19, virus fear, contagion risk, precautionary behavior, mobility
JEL Classification: I10, D81, H7, L51
Suggested Citation: Suggested Citation