Pandemics through the lens of occupations

ABSTRACT

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 evolution 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 weekly infection rate by two percentage points but reduces the trough consumption level by four percentage points, even without policy‐mandated lockdowns. The model also produces widening consumption inequality, a fact that has characterized COVID‐19.