Infection externalities and social welfare

This paper investigates the effects of infection externalities on social welfare through constructing several general equilibrium models. The main findings are as follows. When the government increases the degree of controlling infection externalities of the urban skilled sector and the rural sector, social welfare will rise. However, for the urban unskilled sector, the change of social welfare is determined by the elasticity of substitution between unskilled labor and infection rights in this sector.