Working Papers

In response to the COVID-19 pandemic, Schengen countries temporarily reintroduced internal border controls, reversing a decades-long trend of European integration. While existing research has focused mainly on national-level effects of border closures, localized economic consequences remain underexplored. This paper leverages the disruption of cross-border mobility as a natural experiment to study the short-run economic impacts of border closures on European municipalities. Using monthly nighttime lights data, we find that border closures reduced economic activity in border municipalities by approximately 2% relative to interior municipalities.

This study examines the full-scale invasion of Ukraine in February 2022 as a natural experiment to assess the impact of disrupted international market access on regional economic inequalities in Russia. Using nighttime lights data as a proxy for economic activity, we compare cities near the EU and Ukrainian borders, where market access was restricted, to cities in southern Russia, which benefited from reoriented trade networks. Our findings reveal that western border cities experienced economic decline due to reduced trade and industrial disruptions, while southern cities showed relative resilience, likely driven by increased trade with non-Western markets.