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Labor Supply in Pandemics Environments: An Aggregative Games Approach

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  • Luciana C. Fiorini
  • Wilfredo L. Maldonado

Abstract

We analyze the effects that pandemic processes have on labor supply decisions using an aggregative game framework. The individual payoff depends on her labor supply and on the probability of being infected, which in turn, depends on the aggregate labor supply. We show the effects of social and sanitary public policies on the Nash equilibrium and analyze its expectational stability. The results indicate that compensating policies and sanitary policies can attenuate the damaging effect of pandemic and stabilize expectations regarding the aggregate decision of labor supply. We also find a set of parameters where two-period cycles for the expectations revision map may arise, implying the oscillating behavior of the probability of contagion in this class of models.

Suggested Citation

  • 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).
    • Handle: RePEc:spa:wpaper:2022wpecon18
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    References listed on IDEAS

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    1. Birinci, Serdar & Karahan, Fatih & Mercan, Yusuf & See, Kurt, 2021. "Labor market policies during an epidemic," Journal of Public Economics, Elsevier, vol. 194(C).
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    More about this item

    Keywords

    Labor supply; pandemic; aggregative games;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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