Information and Inequality in the Time of a Pandemic

September 11, 2020

Preview Citation

Format: Chicago

Allan Dizioli, and Roberto Pinheiro. Information and Inequality in the Time of a Pandemic, (USA: International Monetary Fund, 2020) accessed September 19, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

We introduce two types of agent heterogeneity in a calibrated epidemiological search model. First, some agents cannot afford staying home to minimize their virus exposure, while others can. Our results show that these poor agents bear most of the epidemic’s health costs. Moreover, we show that having more agents who do not change their behavior during the pandemic could lead to a deeper recession. Second, agents are heterogeneous in developing symptoms. We show that diseases with higher share of asymptomatic cases, even if less lethal, lead to worse health and economic outcomes. Public policies such as testing, quarantining, and lockdowns are particularly beneficial in economies with a larger share of poor agents. However, lockdowns lose effectiveness when part of the agents take precautions to minimize virus exposure independent of government actions.

Subject: COVID-19, Expenditure, Health, Labor, Labor supply, Population and demographics, Public expenditure review

Keywords: Arrival rate, Asymptomatic infection, Asymptomaticity, Bellman equation, COVID-19, Flow utility, Inequality, Infected agent, Infection rate, Labor supply, Public expenditure review, Testing, Time allocation, Unconstrained agent, WP

Publication Details

Pages:

49
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/188
Stock No:

WPIEA2020188
ISBN:

9781513556307
ISSN:

1018-5941

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