Who Should Work from Home during a Pandemic? The Wage-Infection Trade-off / Sangmin Aum, Sang Yoon (Tim) Lee, Yongseok Shin.

Format:

Book

Author/Creator:

Aum, Sangmin.

Contributor:

National Bureau of Economic Research.

Lee, Sang Yoon (Tim).

Shin, Yongseok.

Series:

Working Paper Series (National Bureau of Economic Research) no. w27908.

NBER working paper series no. w27908

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

Shutting down the workplace is an effective means of reducing contagion, but can incur large economic losses. We construct an exposure index, which measures infection risks across occupations, and a work-from-home index, which gauges the ease with which a job can be performed remotely across both industries and occupations. Because the two indices are negatively correlated but distinct, the economic costs of containing a pandemic can be minimized by only sending home those jobs that are highly exposed but easy to perform from home. Compared to a lockdown of all non-essential jobs, the optimal policy attains the same reduction in aggregate exposure (32 percent) with one-third fewer workers sent home (24 vs. 36 percent) and with only half the loss in aggregate wages (15 vs. 30 percent). A move from the lockdown to the optimal policy reduces the exposure of low-wage workers the most and the wage loss of the high-wage workers the most, although everyone's wage losses become smaller. A constrained optimal policy under which health workers cannot be sent home still achieves the same exposure reduction with a one-third smaller loss in aggregate wages (19 vs. 30 percent).

Notes:

Print version record

October 2020.