Seminari Theory-Experimental

Vahagn Jerbashian

University of Barcelona


seminar – 14:30


We derive a model in which firms operate in an epidemic environment and internalize infections among their employees in the workplace. The model is calibrated to fit the moments of the Covid-19 epidemic. We show that firms have incentives to fight against infections and can do so very effectively by increasing teleworking and rotating employees between on-site work, teleworking, and leave. The fight against infections in firms flattens the aggregate infections curve. Subsidies to teleworking reduce infections and save lives. Subsidies to sick leave reduce the cost of sick workers and raise workplace infections. Firms delay and weaken the fight against infections during economic downturns. We also consider a planner that values output and lives. We show that the planner prefers to severely restrict the epidemic by tolerating short-term output losses.

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