How Does the COVID-19 Vaccination Matter? A Spatial Analysis

In this paper, we study the impact of the COVID-19 vaccination on the COVID-19 cases and deaths in the total vaccinated and unvaccinated population by applying the instrumental variable estimator to spatial models and data of US counties for the period of January 01, 2021, to February 28, 2022. We document robust evidence of significant spatial effects in both the dependent and the main explanatory variables of interest. For the whole period considered in this study, the COVID-19 vaccination was found to significantly increase, but at a decreasing rate, the COVID-19 infection and death ratios in the total county population. This result is caused by two opposite effects of the COVID-19 vaccination of two age groups. Specifically, the COVID-19 vaccination of county population aged 65 and below significantly increased the county COVID-19 infection and death ratios while the COVID-19 vaccination of county population aged over 65 significantly reduced them. The finding of strong opposite effects is consistent with the argument that the moral hazard issue is disproportionally worse among vaccinated and probably unvaccinated group of young people, which might cause a surge of the COVID-19 cases and deaths in the period leading to the herd immunity. Finally, we also find that while remaining significant for the period between January 01, 2021, and February 28, 2022, the moral hazard-related impact of the COVID-19 vaccination was substantially decreasing over time as the COVID-19 vaccine coverage increased.