Impacts of stay-at-home policy under the COVID-19 pandemic on post-pandemic economic activities: Global evidence from major cities

• Stay-at-home (SAH) policy’s impact on post-pandemic urban economy was analyzed. • Nighttime light data from 304 major cities worldwide from 2016 to 2022 were used. • Difference-in-differences models with matching were applied to identify the impact. • SAH policy’s impact in cities with slower GDP growth was significantly negative. • SAH policy’s impact in cities with great financial aid was significantly negative. The COVID-19 pandemic has triggered many governments to introduce mitigation policies, such as the stay-at-home (SAH) policy, which significantly altered urban economic dynamics. This study empirically investigates the impact of the SAH policy during the COVID-19 pandemic on the post-pandemic economic activity in city centers, using a global dataset of major cities. A quasi-experimental approach was employed, using yearly nighttime light (NTL) intensity at a grid-cell scale of 15 arc-seconds as a proxy for economic activity levels. Difference-in-differences (DID) models were estimated following a global matching process involving 304 major cities from 2016 and 2022. The results indicate that while a stringent SAH policy negatively impacted post-pandemic economic activities on average, the effect was not statistically significant. However, the impact was significantly negative in cities with higher financial compensation during the pandemic and in cities with lower gross domestic product (GDP) growth prior to the pandemic. This paper discusses the policy implications, including a challenge to the assumption that financial aid accelerates recovery. It suggests additional efforts to revitalize the economy in cities with weak pre-pandemic growth during the post-pandemic period. The insights from this study will assist policymakers in designing public health interventions that account for potential economic risks and incorporate recovery strategies.