The economic costs of restricting international mobility

Elena Rusticelli and David Turner

No 1678, OECD Economics Department Working Papers from OECD Publishing

Abstract: COVID-19 related travel restrictions, including complete border closures, have been one of the first containment measures to be implemented by many countries and have been continuously adjusted according to the epidemiological situation in departure and destination countries. Despite some easing since mid-2020, the level of such restrictions remain high, especially in Europe and North America. The economic costs of restrictions on international travel are apparent in those sectors most directly impacted, as documented here. However, given their important interlinkages, a uniquely sectoral focus is likely to underestimate the broader macroeconomic costs, which are also assessed, albeit with less precision. The importance of these linkages is borne out by the fact that those OECD countries with the largest travel and tourism sectors -- such as Greece, Iceland, Portugal, Mexico and Spain -- are among those that have experienced the largest falls in GDP in 2020 . Indeed, the pre-crisis size of the travel and tourism sector is found to better explain cross-country differences in GDP growth in 2020, than exposure to any of the other sectors considered most vulnerable to COVID-19, or the average stringency of wider country lockdown measures during 2020. These estimates serve as a means to gauge the potential economic benefits of a rapid return to more normal travel arrangements facilitated by the implementation and agreements around testing and vaccination protocols.

Keywords: COVID-19; macroeconomic costs; Restrictions to international mobility (search for similar items in EconPapers)
JEL-codes: F2 F5 J6 R4 Z3 (search for similar items in EconPapers)
Date: 2021-08-13
New Economics Papers: this item is included in nep-int and nep-isf
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