Lives and livelihoods trade-offs: Which COVID-19 strategies for which countries?

Abstract

Are COVID-19 non-pharmaceutical interventions (NPIs) at the expense of economic outcomes? Furthermore, given the heterogeneities in macroeconomic conditions, should countries follow a unified COVID-19 strategy such as “No-COVID”? This study provides cross-country evidence that attempts to address these critical questions during the pandemic era. Given the substantial heterogeneity in unemployment rates of OECD countries, it is necessary to understand the effects of NPIs’ implementation, which could vary widely across conditional quantiles of unemployment rates. Using monthly data from OECD countries from February 2020 to June 2021 and quantile regression analysis for panel data (QRPD), we explore the impacts of NPIs on economic outcomes. The results indicate that NPIs effectively contained the pandemic and had substantial positive impacts on low quantiles of unemployment rates. However, at high quantiles of unemployment rates, the trade-off is viable and significant. In addition, countries’ vaccination policies and scales also predict their economic outlooks, especially when combined with non-pharmaceutical interventions. Based on these findings, this study suggests different COVID-19 strategies for different groups of countries according to their macroeconomic settings. The trade-off between lives and livelihoods is much more troublesome and prevalent in countries with unfavorable macroeconomic conditions and hinders them from pursuing strategies such as “No-COVID”.

Keywords:

• non-pharmaceutical interventions
• vaccination campaign
• COVID-19
• trade-offs
• public health
• unemployment rate

PUBLIC INTEREST STATEMENT

This research explores the impacts of Non-pharmaceutical interventions (NPI) policies on economic outcomes. Our findings suggest that NPIs effectively contained the outbreak of the pandemic and have substantial positive impacts on future outcomes of economic activities at the lower quantile of unemployment rates. However, countries with worse macroeconomic conditions, such as higher unemployment rates, could experience severe economic impacts due to stricter NPIs for the COVID-19 pandemic. Therefore, strategies to contain the COVID-19 pandemic should be applied differently to groups of countries according to their macroeconomic contexts. Some countries such as Germany, Australia, and New Zealand have the resources and developed economic systems to support businesses and individuals. They can adjust to the new normal at a lower cost than other countries. Thus, a “No Covid” strategy might be possible for such countries, as they can apply strong and long-lasting NPIs from the start of the pandemic to reduce cases to near zero, then reopen the structure of economic activity in green zones.

Acknowledgements

This research is funded by University of Economics Ho Chi Minh City, Vietnam

Disclosure statement

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

Additional information

Funding

This work was supported by the University of Economics Ho Chi Minh City (UEH) [2021-09-17-0579].

Notes on contributors

Vu Minh Ngo

Dr. Vu Ngo is a lecturer at University of Economics Ho Chi Minh City (UEH), Vietnam. He is greatly interested in the areas of Financial Economics, International Finance, Financial Stability, Financial Technology, and Digital transformation. Dr. Huan Nguyen is the head of the Financial Market Department at UEH, Vietnam, specializing in macroeconomics, finance research for twelve years. Dr. Hien Phan is a senior lectuietrer at UEH, Vietnam. Her research interests are International Finance, Financial Stability, and Bank efficiency. Dr. Phuong Tran is the head of the Healthcare management division at UEH. She is actively pursuing research in public health economics and the management of public hospitals in the era of digitalization. This paper is one of the outputs of joined research projects between School of Banking and School of Management in UEH to suggest appropriate policies for governments to deal effectively with the COVID-19 pandemic, especially for developing countries such as Vietnam.