Contagion, Migration and Misallocation in a Pandemic

40 Pages Posted: 5 Feb 2021 Last revised: 28 Nov 2022

See all articles by Ke Tang

Ke Tang

Institute of Economics, School of Social Sciences, Tsinghua University

Danxia Xie

Tsinghua University - Institute of Economics

Longtian Zhang

Central University of Finance and Economics

Date Written: November 24, 2022

Abstract

We present a multi-city migration model to study the endogenous choices of migration during a pandemic and evaluate various policy alternatives. Analytical solutions are provided under two situations: laissez-faire equilibrium and social optimum. We find that migration rates diverge under these two situations, especially for the infected people. We also provide a new empirical fact: countries with higher COVID-19 mortality disparity across sub-regions tend to have lower nationwide mortality rates. This new fact is inconsistent with the prediction of the traditional misallocation literature; nevertheless, it is aligned with our theoretical model, which can be seen as an extension of the misallocation framework with cross-region contagion and externality. This research can shed light on policy design under pandemic threat and also help to enrich the misallocation literature.

Keywords: SIR Model, Migration, Misallocation, Hospitalization Resource, Pandemic

JEL Classification: I18, D61

Suggested Citation

Tang, Ke and Xie, Danxia and Zhang, Longtian, Contagion, Migration and Misallocation in a Pandemic (November 24, 2022). Available at SSRN: https://ssrn.com/abstract=3779278 or http://dx.doi.org/10.2139/ssrn.3779278

Ke Tang

Institute of Economics, School of Social Sciences, Tsinghua University ( email )

No.1 Tsinghua Garden
Beijing, 100084
China

Danxia Xie

Tsinghua University - Institute of Economics ( email )

MingZhai Building
Beijing, 100084
China

HOME PAGE: http://sites.google.com/site/xiedanxia/

Longtian Zhang (Contact Author)

Central University of Finance and Economics ( email )

Shahe Higher Education Park
Changping District
Beijing, Beijing 102206
China

HOME PAGE: http://longtianzhang.com

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