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The economic costs of restricting international mobility

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  • Elena Rusticelli
  • David Turner

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.

Suggested Citation

  • Elena Rusticelli & David Turner, 2021. "The economic costs of restricting international mobility," OECD Economics Department Working Papers 1678, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:1678-en
    DOI: 10.1787/dcad4c73-en
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    More about this item

    Keywords

    COVID-19; macroeconomic costs; Restrictions to international mobility;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics
    • Z3 - Other Special Topics - - Tourism Economics

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