The Economic Case for Global Vaccinations: An Epidemiological Model with International Production Networks

We present a global general equilibrium model that incorporates input-output linkages across multiple sectors and countries to analyze the impact of pandemic-related labor supply shocks. These shocks vary across industries due to differences in how occupations are affected by the disease, influenced by factors such as contact intensity and the feasibility of remote work. Using the model, we quantify the economic rationale for global vaccinations. Given empirically relevant trade and production elasticities, where labor and imported intermediate inputs complement each other, we examine several scenarios. If wealthy countries vaccinate only their own populations, global output could decline by nearly 1% compared to pre-pandemic levels. In contrast, investing in global vaccinations could yield a 178% return on investment for wealthy nations and potentially halve the global output decline. Vaccinating low-income countries could mitigate economic impacts on wealthy nations through sectoral trade and production linkages, significantly reducing losses by 70% without compromising rich countries own vaccination efforts.