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COVID-19 vaccination and household savings: An economic recovery channel

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  • Ren, He
  • Zheng, Yi

Abstract

The COVID-19 pandemic increased people’s propensity for precautionary savings in response to economic recession (e.g., Mody et al., 2012; Gropp and McShane, 2021; Levine et al., 2021). However, as the relevant vaccine roll-out continues, it mitigates people’s concerns and boosts the macroeconomy, which leads to significant declines in household precautionary saving motives. Consistent with this expectation, using U.S. county-level vaccination, deposit, economic, and demographic data, we show that there is a significant negative relationship between COVID-19 vaccination and household savings. We attribute this negative relationship to an economic recovery channel because our findings also suggest that the vaccination has a strong negative impact on the unemployment rate and results in increases in consumer spending. Overall, our study adds to an emerging strand of literature on how COVID-19 vaccination affects households’ financial behaviors.

Suggested Citation

  • Ren, He & Zheng, Yi, 2023. "COVID-19 vaccination and household savings: An economic recovery channel," Finance Research Letters, Elsevier, vol. 54(C).
    • Handle: RePEc:eee:finlet:v:54:y:2023:i:c:s1544612323000855
    DOI: 10.1016/j.frl.2023.103711
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    More about this item

    Keywords

    Coronavirus; Vaccines; Household finance; Household savings; Deposit growth; Unemployment;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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