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Twin peaks: COVID-19 and the labour market

Author

Listed:
  • Jake Bradley
  • Alessandro Ruggieri
  • Adam Spencer

Abstract

This paper develops a choice-theoretic equilibrium model of the laboUr market in the presence of a pandemic. It includes heterogeneity in productivity, age and the ability to work at home. Worker and firm behaviour changes in the presence of the virus, which itself has equilibrium consequences for the infection rate. The model is calibrated to the UK and counterfactual lockdown measures are evaluated. We find a different response in both the evolution of the virus and the labour market with different degrees of severity of lockdown. We use these insights to make a laboor market policy prescription to be used in conjunction with lockdown measures. Finally we find that, while the pandemicand ensuing policies impact the majority of the population negatively, consistent with recent studies, the costs are not borne equally. While the elderly face the highest health risks, it is the young low wage workers who suffer the most income and employment risk.

Suggested Citation

  • Jake Bradley & Alessandro Ruggieri & Adam Spencer, 2020. "Twin peaks: COVID-19 and the labour market," Discussion Papers 2020/06, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
    • Handle: RePEc:not:notcfc:2020/06
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    File URL: https://www.nottingham.ac.uk/cfcm/documents/papers/2020/cfcm-2020-06.pdf
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    Cited by:

    1. Bauer, Anja & Weber, Enzo, 2021. "Lockdown length and strength: labour-market effects in Germany during the COVID-19 pandemic," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242452, Verein für Socialpolitik / German Economic Association.
    2. Vanda Almeida & Salvador Barrios & Michael Christl & Silvia Poli & Alberto Tumino & Wouter Wielen, 2021. "The impact of COVID-19 on households´ income in the EU," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(3), pages 413-431, September.
    3. Diaz, Antonia & Dolado, Juan J. & Jáñez, Álvaro & Wellschmied, Felix, 2025. "Labor reallocation effects of furlough schemes: Evidence from two recessions in Spain," European Economic Review, Elsevier, vol. 171(C).
    4. Fiorini, Luciana C. & Maldonado, Wilfredo L., 2025. "Effects of wage compensation and containment policies on Labor supply during pandemics," Economic Modelling, Elsevier, vol. 147(C).
    5. Regina Pleninger & Sina Streicher & Jan-Egbert Sturm, 2022. "Do COVID-19 containment measures work? Evidence from Switzerland," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 158(1), pages 1-24, December.
    6. Tsai, I-Chun & Chiang, Ying-Hui & Lin, Shih-Yuan, 2022. "Effect of COVID-19 lockdowns on city-center and suburban housing markets: Evidence from Hangzhou, China," Journal of Asian Economics, Elsevier, vol. 83(C).
    7. Edward J D Webb & Philip G Conaghan & Max Henderson & Claire Hulme & Sarah R Kingsbury & Theresa Munyombwe & Robert West & Adam Martin, 2024. "Long-term health conditions and UK labour market outcomes during the COVID-19 pandemic," PLOS ONE, Public Library of Science, vol. 19(5), pages 1-23, May.
    8. Aleem, Majid & Sufyan, Muhammad & Ameer, Irfan & Mustak, Mekhail, 2023. "Remote work and the COVID-19 pandemic: An artificial intelligence-based topic modeling and a future agenda," Journal of Business Research, Elsevier, vol. 154(C).
    9. Luciana C. Fiorini & Wilfredo L. Maldonado, 2022. "Labor Supply in Pandemics Environments: An Aggregative Games Approach," Working Papers, Department of Economics 2022_18, University of São Paulo (FEA-USP).
    10. Ali Zarifhonarvar, 2023. "A Survey on the Impact of Covid-19 on the Labor Market," The Journal of Social Sciences Research, Academic Research Publishing Group, vol. 9(1), pages 1-10, 03-2023.
    11. Becchetti, Leonardo & Beccari, Gabriele & Conzo, Gianluigi & Conzo, Pierluigi & De Santis, Davide & Salustri, Francesco, 2025. "The controversial environmental effects of COVID-19 lockdown on quality of air: evidence from Italian municipalities," Energy Economics, Elsevier, vol. 151(C).
    12. Mohimont, Jolan & de Sola Perea, Maite & Zachary, Marie-Denise, 2024. "Softening the blow: Job retention schemes in the pandemic," Journal of Public Economics, Elsevier, vol. 238(C).

    More about this item

    Keywords

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    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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