Lights Out? COVID-19 Containment Policies and Economic Activity

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.

Keywords: Containment policies, COVID-19, Nighttime lights, India

JEL Classification: E21, H12, I18