Vaccination and Economic Recovery

ABSTRACT The COVID‐19 pandemic severely hampered human mobility and disrupted a series of economic activities. In this study, I examine the impacts of vaccine coverage on mobility and several other economic indicators in the US. I construct a novel shift‐share instrument that leverages the strong correlation between vaccination rates and demographic composition by sex and age group to address endogeneity concerns. Using high‐frequency data, I find strong evidence that higher vaccine coverage increased mobility, reflected in more trips taken and a lower likelihood of staying at home. I then assess the effects of vaccination on multiple economic indicators. I find modest evidence that higher vaccine coverage increased labor market participation and employment rate, while the effects on new business applications and home mortgage applications are limited.