Template-Type: ReDIF-Paper 1.0
Title: An Economic Model of the COVID-19 Pandemic With Young and Old Agents: Behavior, Testing and Policies
Author-Name: Luiz Brotherhood
Author-Email: brotherhoodluiz@gmail.com
Author-Name: Philipp Kircher
Author-Email: philipp.kircher@eui.eu
Author-Name: Cezar Santos
Author-Email: cezarsantos.econ@gmail.com
Author-Name: Michéle Tertilt
Author-Email: tertilt@uni-mannheim.de

Classification-JEL: E17, C63, D62, I10, I18
Keywords: Covid-19, testing, social distancing, age-specific policies

Abstract: This paper investigates the importance of the age composition in the
Covid-19 pandemic. We augment a standard SIR epidemiological model
with individual choices on work and non-work social distancing. Infected
individuals are initially uncertain unless they are tested. We find that older
individuals socially distance themselves substantially in equilibrium. Confining
the old even more reduces their welfare. Confining the young extends
the duration of the epidemic, with negative consequences on the old
if the epidemic cannot be controlled after confinement. Testing and quarantines
save lives, even if conducted just on the young, as does separation
of activities by age. Combining policies can increase the welfare of both
the young and the old.

Note: 
Length: 57
Creation-Date: 2020-08
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp175
Handle: RePEc:bon:boncrc:CRCTR224_2020_175v2