Infectious Disease, Frictional Labor Market, Inexperienced Labor, and Related Government Policies

ABSTRACT

Introducing susceptible–infected–recovered epidemiology dynamics into a labor search model, this paper investigates the impact of infectious diseases and related policies, such as lockdowns and vaccinations, on people's health and related macroeconomic performance. We find that the spread of infectious disease has a negative impact, whereas vaccination policy can improve the situation. Although the lockdown policy is good for public health, it is harmful to economic productivity. When considering heterogeneous labor with inexperienced workers, this paper finds that firms are less willing to hire inexperienced workers, and the employment situation of inexperienced workers will be worse.