Who Should Work from Home during a Pandemic? The Wage-Infection Trade-off

Sang Yoon (Tim) Lee, Sangmin Aum and Yongseok Shin

No 15332, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: 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).

Keywords: Lockdown; Exposure; Work from home; Pandemic (search for similar items in EconPapers)
JEL-codes: E24 I14 J21 (search for similar items in EconPapers)
Date: 2020-10
New Economics Papers: this item is included in nep-hea and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Related works:
Journal Article: Who Should Work from Home During a Pandemic? The Wage-Infection Trade-off (2022)
Working Paper: Who Should Work from Home during a Pandemic? The Wage-Infection Trade-off (2020)
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