The Economic and Long-Term Health Consequences of Canadian Covid Lockdowns

Abstract

To prevent exponential spread of Covid-19, many governments restricted economic activity through “lockdowns”. We model these restrictions as shocks to productivity by sector, and trace through total equilibrium effects across the economy using techniques from production network economics. We combine this economic model with an epidemiological model of income shocks on long-term health. On both long-run health and economic grounds, it is better to keep upstream sectors like transportation, manufacturing, and wholesale open rather than consumer-facing sectors like retail and restaurants.