Health versus wealth: On the distributional effects of controlling a pandemic
Andrew Glover, Jonathan Heathcote, Dirk Krueger, José-V́ıctor Ŕıos-Rull
Abstract
To slow the COVID-19 virus, many countries shut down parts of the economy. Older individuals have the most to gain from slowing virus diffusion. Younger workers in shuttered sectors have most to lose. We build a model in which economic activity and disease progression are jointly determined. Individuals differ by age, sector and health status. Disease transmission occurs at work, at home, through consumption, and in hospitals. Optimal economic shutdowns in 2020 are milder when taxes are distortionary, and when the government does not have access to debt. A harder, shorter shutdown is preferred when vaccines become available in early 2021.
Topics & Concepts
DebtEconomicsPandemicConsumption (sociology)Shut downGovernment (linguistics)Coronavirus disease 2019 (COVID-19)Work (physics)Monetary economicsDemographic economicsDiseaseDevelopment economicsMacroeconomicsMedicineInfectious disease (medical specialty)Operating systemPhilosophyEngineeringSociologyMechanical engineeringPathologyComputer scienceLinguisticsSocial scienceCOVID-19 epidemiological studiesCOVID-19 Pandemic ImpactsIncome, Poverty, and Inequality