Impact of changes in geographical mobility on knowledge-intensive sectors' economy : An approach to econometric analysis using machine learning

Abstract: Rarely have humanity encountered a crisis such as the COVID-19 pandemic. Authorities and companies need to more than ever take the proper measures to counteract the harmful effects of the pandemic on the economy to help the population get through such difficult times. Therefore, it may be of interest to stakeholders to further understand the effects of the pandemic on the economies of various business sectors. This study analyzes the impact of changes in employees’ geographical mobility on the overall economy of knowledge-intensive (KI) sectors during the COVID-19 pandemic. In collaboration with Statistics Sweden, approximately 4.2 million unique mobile phones have been linked to company information and subsequently observed. The correlations between changes in the number of active cell phones and revenues from KI sectors have been measured for the period 2019 and 2020. The machine learning method in the study proposes a way to reduce standard errors of Ordinary least square for econometric observations. The results show that a -10% change in the number of mobile phones in a certain area has generally implied an estimated +1.3 % change in the revenue of KI companies operating in that area. Given the results, an increasing trend towards digitization and government monetary support packages, this study concludes that the economy of KI sectors has not been particularly affected by individual companies’ restrictions for employees. This economical change is on a tolerable level and therefore, the Swedish authorities’ initiative to aid these sectors in this time of crisis is considered effective.