No country for young people: Intergenerational burdens of COVID-19 policy responses

This paper analyzes the intergenerational welfare effects of the economic policy response to the COVID-19 pandemic, with particular attention to containment measures, fiscal expansions, and alternative public debt repayment schemes. We build on Gertler’s (1999) model by introducing the pandemic as a negative shock to survival probabilities. Social distancing and lockdowns reduce mortality among older cohorts but simultaneously depress labor productivity, capturing the key demographic asymmetry of the pandemic. Within this framework, we construct age-specific welfare indices for “young” and “old” agents, as well as a relative welfare metric to evaluate intergenerational trade-offs. Our quantitative analysis yields four main results: (1) in the absence of containment measures, welfare losses are concentrated among older agents through a demographic channel; (2) lockdowns substantially shift the burden of welfare losses toward younger cohorts, reflecting the trade-off between mortality reduction and output contraction; (3) debt-financed fiscal expansions exert only a modest effect on relative welfare compared with the dominant impact of social distancing; (4) the intergenerational distribution of welfare depends critically on debt repayment strategies: front-loaded schemes disproportionately penalize younger generations, whereas postponed repayment schedules favor older cohorts, raising equity and policy-design considerations for future large-scale crises.