The Labor Market Implications of Restricted Mobility during the COVID-19 Pandemic in Kenya

Abstract

The COVID-19 pandemic affected people’s livelihoods in many ways, particularly in developing countries. This paper examines the degree to which recovering mobility levels impacted labor market outcomes in Kenya over the course of the pandemic, starting from May 2020 until June 2021. It uses an instrumental variable approach to identify the causal impacts of mobility reduction induced by policy changes on labor market outcomes. The findings show that a 10 percent recovery of mobility led to a 12 percentage points increase in labor force participation and a 9 percent points increase in household members being employed. At the same time, a 10 percent recovery of mobility caused an increase of 11 wage hours per week (formal and informal). Among the factors influencing self-reported mobility-reducing behavior, trust in the government’s ability to deal with the pandemic correlates with less self-reported mobility reduction, while people who knew someone with an infection tend to reduce mobility less. Finally, countrywide policy stringency levels clearly reduce self-reported mobility. Given the demonstrated adverse impacts of reducing mobility on economic indicators, the government should explore options to limit the economic fall-out while protecting citizens from infections, for example, by using partial or geographically constrained lockdowns.