Implementation and spillovers of local non-pharmaceutical interventions

Abstract

In this paper, we analyze economic costs and consequences of local non-pharmaceutical interventions (NPIs) aimed at containing the Covid-19 pandemic. Using comprehensive data on municipal and regional policies in Norway, we implement a difference-in-differences framework identifying impacts of local NPIs from discontinuous differential shifts in outcomes following the implementation of new policies. In treated municipalities, local NPIs lead to persistent reductions in mobility, persistent increases in unemployment, and transient reductions in consumer spending. Analyses of spatial spillovers show that the implementation of local NPIs increases retail mobility in untreated neighboring municipalities. Overall, our findings suggest that local NPIs have economic consequences for local economies and induce residents to shift their consumption of goods and services to neighboring municipalities.