War, Economic Activity, and Spatial Inequality: Evidence from Nighttime Lights in Ukraine

Abstract

The Russian invasion of Ukraine in 2022 caused an unprecedented economic shock, yet reliable measures of economic activity during wartime are scarce, particularly at the subnational level. Official GDP statistics are available only at the national level and with substantial delays, while systematic evidence remains limited on how the war affected economic activity across regions. This paper provides a nationwide subnational assessment of the economic impact of the war in Ukraine by exploiting satellite-based nighttime light data as a proxy for local economic activity. Using annual VIIRS Day/Night Band data for the period 2014-2024, we analyze changes in nighttime light intensity across Ukrainian districts and relate them to geographic exposure to armed conflict events recorded by ACLED. We estimate two-way fixed effects models that exploit within-district variation over time and spatial variation in distance to conflict locations following the escalation of the war in 2022. Because distance to conflict is not exogenously assigned, the estimates are interpreted as spatial associations rather than causal effects. At the national level, we document a strong correlation between official GDP and nighttime lights, supporting the validity of the proxy in the Ukrainian context. Our results reveal a pronounced spatial gradient in wartime economic disruption. Districts located closer to conflict events experienced significantly larger declines in nighttime-light intensity after 2022. The continuous specification shows that these declines attenuate with distance, while the categorical estimates suggest that the relative difference increases up to approximately 25-50 km and changes little beyond that range. These findings highlight the localized nature of wartime changes in observed nighttime activity and underscore the value of satellite data for examining economic dynamics in settings characterized by data gaps, conflict, and institutional disruption.