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Information and Inequality in the Time of a Pandemic

Author

Listed:
  • Allan Dizioli
  • Roberto Pinheiro

Abstract

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.

Suggested Citation

  • Allan Dizioli & Roberto Pinheiro, 2020. "Information and Inequality in the Time of a Pandemic," IMF Working Papers 2020/188, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2020/188
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    Cited by:

    1. Yoontae Hwang & Yongjae Lee & Frank J. Fabozzi, 2023. "Identifying household finance heterogeneity via deep clustering," Annals of Operations Research, Springer, vol. 325(2), pages 1255-1289, June.
    2. Brotherhood, Luiz & Kircher, Philipp & Santos, Cezar & Tertilt, Michèle, 2023. "Optimal Age-based Policies for Pandemics: An Economic Analysis of Covid-19 and Beyond," IDB Publications (Working Papers) 13295, Inter-American Development Bank.
    3. Cerqueti, Roy & Tramontana, Fabio & Ventura, Marco, 2022. "The complex interplay between COVID-19 and economic activity," Mathematical Social Sciences, Elsevier, vol. 119(C), pages 97-107.
    4. Bargain, Olivier & Aminjonov, Ulugbek, 2021. "Poverty and COVID-19 in Africa and Latin America," World Development, Elsevier, vol. 142(C).
    5. Brotherhood, Luiz & Kircher, Philipp & Santos, Cezar & Tertilt, Michele, 2024. "Optimal Age-based Policies for Pandemics: An Economic Analysis of Covid-19 and Beyond," LIDAM Discussion Papers CORE 2024012, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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