COVID-19: ‘Lockdown’ and Institutions

To control the infection rate of COVID-19 countries have introduced lockdown measures with the sole purpose to restrict movement of the population. But the impact of those measures has been markedly different. Using data for over 60 countries and employing a difference-in-differences design (and a set of robustness checks) this paper identifies the role of institutions and peoples’ perception of the severity of the spread of COVID-19 in explaining the differential impact of the lockdown measures on movement. The results show that countries with a high level of quality of institutions are less responsive to the implementation of lockdown measures when the perception of the severity of the spread of the virus is low. The implication of this is that when it comes to unexpected shocks, such as the pandemic COVID-19, that require decisive actions and limitation in the movement of individuals as a means of controlling the spread of the shock (and the virus), high quality institutions react rather sluggishly.