COVID-19, social distancing, and economic growth

ABSTRACT

Social distancing restrictions have become a primary measure in curbing the spread of the COVID-19 pandemic. Given the fact that the survival probability of infected individuals and labour supply will decline during the pandemic, this study extends the overlapping generations (OLG) model to include the effects of COVID-19 on individuals’ health and investigates the optimal social distancing policy from an economic perspective. Our results show that the pandemic can cause economic contraction, and a strict social distancing policy generally benefits economic growth. Nevertheless, absolute zero socializing may not be an optimal strategy.

KEYWORDS:

• COVID-19
• social distancing
• production
• economic growth

JEL CLASSIFICATION:

• I18
• E17
• H83

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ This is because the current old people in the OLG model do not make any new decisions, so they exert no effect on the future economic growth. Thus, we do not consider the infection of the old people in the initial period of the OLG model.

Additional information

Funding

This research was funded by National Natural Science Foundation of China (grant no.12071498), Beijing Social Science Fund (grant no. 19YJC043), and Higher Education Discipline Innovation Project (grant no. B17050).