Centre for Development Economics
Department of Economics

Delhi School of Economics


Health and economic inequality during pandemics: A heterogeneous agent perspective


Aditya Goenka
(University of Birmingham)


 (Thursday, September 14, 2023, at 3:15 PM IST)
Venue: Amex Room


This paper studies optimal preventive and treatment actions by agents who differ only in their wealth status in the event of a pandemic. The agents cannot insure against income risk as in the Aiyyagari-Bewley framework. Unlike the canonical framework where the income risk is exogenous, in our framework this is affected by individual choices and the endogenously determined economic and epidemiological variables. Consistent with the evidence from the Covid pandemic, income, wealth, and health (proxied by infection rates) inequality increase due to the pandemic. The increase in income inequality is temporary but that of wealth is persistent. The increase in inequalities is driven by the increasing elasticities of health expenditures with wealth.
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