Peasant farmers and pandemics: the role of seasonality and labor-leisure trade-off decisions in economy-wide models

Pandemics attack the primary asset (labor) of peasant households and the rural poor. Peasant households must simultaneously allocate labor between farm and household activities, where the demand for agricultural labor is seasonal, which limits intra-temporal substitution, without perfect foresight. A pandemic reduces the supply of labor, through deaths and morbidity, with the scale of reductions in labor supply depending on the seasons in which a pandemic occurs. The analyses, using a recursive dynamic economy-wide model for Bhutan, demonstrate that outbreaks in high labor demand seasons cause increases in wage rates almost three times as high as for outbreaks in low labor demand seasons. Increases in wage rates induce peasant households to reallocate labor time between farm and household activities through the labor-leisure trade-off mechanism. Such changes in the allocation of labor time are important elements of peasants’ mitigation responses, and can reduce the negative economic implications of a pandemic.