 Effects of wage compensation and containment policies on Labor supply during pandemicsLuciana C. Fiorini and Wilfredo L. Maldonado Economic Modelling, 2025, vol. 147, issue C Abstract: The importance of combining wage compensation policies with contagion containment strategies during a pandemic became evident after the COVID-19 pandemic. We examine the impact of these policies on the labor market using an aggregative game framework that describes the interaction of individual and aggregate labor supply decisions, which has not been considered in previous approaches. Workers must choose their labor supply considering the probability of contagion and compensation for income reductions in case of infection and assess the probability of contagion based on the public perception of the aggregate labor supply. We analyze the effects of changes in contagion containment parameters and wage compensation policies on individual and aggregate labor supplies. We also demonstrate evident labor supply cycles and persistent oscillations in contagion probability values, which are commonly observed in pandemic processes. We conclude that successful public policies that are intended to stabilize the labor market depend on a combination of instruments that consider population size and workers’ risk aversion. Keywords: Labor supply; Pandemic; Aggregative games (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:147:y:2025:i:c:s0264999325000252 DOI: 10.1016/j.econmod.2025.107030 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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