Disease spread is in part a function of individual behavior. We examine the factors predicting individual behavior during the Covid-19 pandemic in the United States using novel data collected by Belot et al. (2020). Among other factors, we show that people with lower income, less flexible work arrangements (e.g., an inability to tele-work) and lack of outside space at home are less likely to engage in behaviors, such as social distancing, that limit the spread of disease. We also find that individuals in Florida and Texas (versus California and New York), men (versus women) and people who perceive fewer benefits of protective behaviors (versus those perceive more benefits) report lower levels of self-protecting behaviors. Broadly, our findings align with many typical relationships between health and socio-economic status. Moreover, we show that the burden of measures designed to stem the pandemic are unevenly distributed across socio-demographic groups in ways that affect behavior and thus potentially the spread of illness. Policies that assume otherwise are unlikely to be effective or sustainable.
Belot, M, S Choi, J Jamison, N Papageorge, E Tripodi, E Van den Broek-Altenburg and M Zahn (2020), ‘Socio-Demographic Factors Associated with Self-Protecting Behavior during the Covid-19 Pandemic‘, COVID Economics 40, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-40#392514_392916_390574
To better understand the trade-offs at play as US states take measures to slow the spread of COVID-19, we investigate the effectiveness of alternative mitigation strategies using panel data estimates informed by epidemiological models. Our analysis evaluates public health outcomes using estimates of the effective reproduction number (Rt), which must drop below 1.0 to achieve sustained reductions in the infectious population. We fit outcomes for Rt on mitigation measures adopted by states, using daily data from early February through late June. Although all of the measures examined help reduce Rt, their effectiveness varies. Reductions in personal mobility on the scale achieved in April can reduce Rt by about a half and are especially effective when paired with stay-at-home orders. Alternatively, our estimates suggest that the virus could be brought under control using less-costly remediation measures. Those measures would likely involve more testing (at a rate of at least 1.75 million per day, if used in isolation), mask wearing requirements (which, in some specifications, are equivalent to testing 1.1mn persons per day), and restrictions on seated dining (which are effective when masks are not mandated). Finally, our estimates suggest that the US is nowhere near the point where â€œherd immunityâ€ alone can bring infections under control
Gapen, M, J Millar, P Sriram and B Uruçi (2020), ‘Assessing the effectiveness of alternative measures to slow the spread of COVID-19 in the United States‘, COVID Economics 40, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-40#392514_392916_390575
Effects of the COVID-19 shocks in the Japanese labor market vary across people of different age groups, genders, employment types, education levels, occupations, and industries. We document heterogeneous changes in employment and earnings in response to the COVID-19 shocks, observed in various data sources during the initial months after onset of the pandemic in Japan. We then feed these shocks into a life-cycle model of heterogeneous agents to quantify welfare consequences of the COVID-19 shocks. In each dimension of the heterogeneity, the shocks are amplified for those who earned less prior to the crisis. Contingent workers are hit harder than regular workers, younger workers than older workers, females than males, and workers engaged in social and non-flexible jobs than those in ordinary and flexible jobs. The most severely hurt by the COVID-19 shocks has been a group of female, contingent, low-skilled workers, engaged in social and non-flexible jobs and without a spouse of a different group.
Kikuchi, S, S Kitao and M Mikoshiba (2020), ‘Who Suffers from the COVID-19 Shocks? Labor Market Heterogeneity and Welfare Consequences in Japan‘, COVID Economics 40, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-40#392514_392916_390576
The paper introduces voluntary social distancing to the canonical epidemiology model, integrated into a conventional macroeconomic model. The model is extended to include treatment, vaccination, and government-enforced lockdown. Infection-averse individuals face a trade-off between a costly social distancing and the risk of getting infected and losing next-period labor income. We find an individualâ€™s social distancing is proportional to the welfare loss she incurs when moving to the infected compartment. It increases in the individualâ€™s psychological discount factor but decreases in the probability of receiving a vaccination. Quantitatively, a laissez-faire social distancing flattens the infection curve that minimizes the economic damage of the epidemic. A government-enforced social distancing is more effective in flattening the infection curve but has a detrimental effect on the economy.
Getachew, Y (2020), ‘Optimal Social Distancing in SIR based Macroeconomic Models‘, COVID Economics 40, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-40#392514_392916_390577
We discuss the impact of a Covid-like shock on a simple toy economy, described by the Mark-0 Agent-Based Model that we developed and discussed in a series of previous papers. We consider a mixed supply and demand shock, and show that depending on the shock parameters (amplitude and duration), our toy economy can display V-shaped, U-shaped or W-shaped recoveries, and even an L-shaped output curve with permanent output loss. This is due to the existence of a self-sustained ``bad'' state of the economy. We then discuss two policies that attempt to moderate the impact of the shock: giving easy credit to firms, and the so-called helicopter money, i.e. injecting new money into the households savings. We find that both policies are effective if strong enough, and we highlight the potential danger of terminating these policies too early. Interestingly, when policy is successful, inflation post-crisis is significantly increased. While we only discuss a limited number of scenarios, our model is flexible and versatile enough to allow for a much wider exploration, thus serving as a useful tool for the qualitative understanding of post-Covid recovery.
Bouchaud, J, S Gualdi, D Sharma, M Tarzia and F Zamponi (2020), ‘V -, U -, L - or W-shaped economic recovery after COVID-19? Insights from an Agent Based Model‘, COVID Economics 40, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-40#392514_392916_390578
This paper investigates the â€œculturalâ€ transmission of the SARS-CoV-2 outbreak. Using data from Germany we observe that in predominantly Catholic regions with stronger social and family ties, the spread and the resulting deaths per capita were much higher compared to non-Catholic ones at the local NUTS-3 level. The result is strengthened with Difference-in-Difference estimates at the regional NUTS-1 level. This finding could help explain the rapid spread and high death toll of the virus in some European countries compared to others. Looking at differences within a specific country in a well identified setting eliminates biases due to different social structures, health care systems, specific policies and measures, and testing procedures for the virus that can confound estimates and hinder comparability across countries. Further, we use individual level data as well as mobility data from mobile devices to investigate potential mechanisms. The results highlight the cultural dimension of the spread and could suggest the implementation of targeted mitigation measures in light of disease outbreaks.
Laliotis, I and D Minos (2020), ‘Spreading the disease: The role of culture‘, COVID Economics 40, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-40#392514_392916_390579
With the help of growth forecasts and a simple structural model, we build a likely forward-looking account of the depth, length and shape of the recession as well as of the demand and supply shocks that are driving it. The results point to a V-shaped recession with partial recovery in advanced economies and to an L-shaped recession in emerging and developing economies. In addition, the projected shapes likely involve, in advanced economies, an output level shock, and in emerging and developing economies, an output growth shock. The depth and shape of the recession in output is important for fiscal debt sustainability analysis; in this matter the results are robust to the model parameters and assumptions. In turn, the depth and length of the recession in the output gap is critical for monetary and fiscal policies; in this matter we had to appeal to an assumption about the extent of the demand shock. The simple structural model does not have the problem of univariate filters that can misleadingly attribute to demand shocks a large part of the variability of output that is actually originated in supply shocks.
Gomez-Pineda, J (2020), ‘Growth forecasts and the covid-19 recession they convey‘, COVID Economics 40, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-40#392514_392916_390580
The Covid-19 crisis has led to disruption to schooling across the world. Though it is recognized that pupils are suffering immediate learning loss, there exists a lack of understanding as to how this disruption might affect longer-term educational outcomes. This study considers this issue by examining the effect of school disruption in England due to restrictions put in place to manage the Foot and Mouth Disease epidemic in cattle in 2001. Using a difference in difference approach, I analyze whether primary schools that had been significantly disrupted by the epidemic experienced lower performance in standardized tests for pupils aged 11 in English, maths and science in the year of the outbreak and in subsequent years. I find that primary schools that had been significantly disrupted by the measures to contain the epidemic exhibited achievement falls in the year immediately after the outbreak, driven by sizeable falls in maths performance. The negative effects weaken in subsequent years suggesting that the effects of school disruption had faded out to some extent by the time that cohorts that were younger at the time of exposure took the age 11 tests.
Cook, W (2020), ‘School disruption and pupil academic outcomes â€“ evidence from the 2001 foot and mouth disease epidemic in England‘, COVID Economics 40, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-40#392514_392916_390810