Pandemics Through the Lens of Occupations
We outline a macro-pandemic model where individuals can select into working from home or in the market. Market work increases the risk of infection. Occupations differ in the ease of substitution between market and home work, and in the risk of infection. We examine the evo- lution of a pandemic in the model as well as its macroeconomic and distributional consequences. The model is calibrated to British Columbian data to examine the implications of shutting down different industries by linking industries to occupations. We find that endogenous choice to self- isolate is key: it reduces the peak infection rate by 2 percentage points but reduces the trough consumption level by 4 percentage points, even without policy mandated lockdowns. The model also produces widening consumption inequality, a fact that has characterized COVID-19.
We are grateful for comments from seminar participants at the Bank of Canada, the Vancouver School of Economics, and the Government of British Columbia. Devereux and Lahiri thank SSHRC for financial support. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.