Open AccessSocial distancing and supply disruptions in a pandemic
Author(s) -
Bodenstein Martin,
Corsetti Giancarlo,
Guerrieri Luca
Publication year - 2022
Publication title -
quantitative economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.062
H-Index - 27
eISSN - 1759-7331
pISSN - 1759-7323
DOI - 10.3982/qe1618
Subject(s) - social distance , pandemic , distancing , quarter (canadian coin) , economics , core (optical fiber) , covid-19 , business , demographic economics , labour economics , public economics , computer science , medicine , geography , telecommunications , disease , archaeology , pathology , infectious disease (medical specialty)
We integrate an epidemiological model, augmented with contact and mobility analyses, with a two‐sector macroeconomic model, to assess the economic costs of labor supply disruptions in a pandemic. The model is designed to capture key characteristics of the U.S. input–output tables with a core sector that produces intermediate inputs not easily replaceable by the other sectors, possibly subject to minimum‐scale requirements. Using epidemiological and mobility data to inform our exercises, we show that the reduction in labor services due to the observed social distancing (spontaneous and mandatory) could explain up to 6–8 percentage points of the roughly 12% U.S. GDP contraction in the second quarter of 2020. We show that public measures designed to protect workers in core industries and occupations with tasks that cannot be performed from home, can flatten the epidemiological curve at reduced economic costs—and contain vulnerabilities to supply disruptions, namely a new surge of infections. Using state‐level data for the United States, we provide econometric evidence that spontaneous social distancing was no less costly than mandated social distancing.