Local restrictions, population movement, and spillovers during the pandemic: Evidence from Japan's restaurant restriction

Abstract

We investigate how a local restaurant restriction aimed at containing the COVID‐19 pandemic influenced population movement and COVID‐19 prevalence within and outside the restricted districts. Using data on restaurant location and hourly population at the 500‐m‐mesh level and on COVID‐19 prevalence at both prefecture and municipality level in Japan, we employ a triple‐difference approach and a difference‐in‐differences approach with fixed effects. While the policy decreased population movement to restaurant areas in the restricted districts, it caused spillovers of increasing population movement to restaurant areas in the neighboring nonrestricted districts. Consequently, COVID‐19 prevalence worsened in the neighboring nonrestricted districts but improved in the restricted districts. Our findings suggest that imposing such local restrictions in the context of the pandemic may contain the pandemic only in the restricted districts while sacrificing economic activities within these districts and public health in neighboring nonrestricted districts.