Slack and Tightness: Making Sense of Post COVID-19 Labour Market Developments in the EU

Áron Kiss, Maria Chiara Morandini, Alessandro Turrini and Anneleen Vandeplas

No 178, European Economy - Discussion Papers from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: This paper attempts to shed light on post-COVID-19 labour market developments across the EU, notably on the simultaneous presence of elements of slack and indications of tightness over the course of 2021. It presents available data on labour market mismatch and discusses possible dynamics going forward. In light of the strong sectoral dimension of the COVID-19 shock, the paper explores differences in the impact of the COVID-19 crisis across countries, relevant sectoral aggregates, and workers’ characteristics. The paper also conducts econometric estimations with a view to gauge whether Beveridge curves have shifted upward after the COVID-19 outbreak. The results indicate a modest upward shift in the EU Beveridge curves in 2020, partly reversed in the course of 2021. Despite the fact that skill mismatch somewhat worsened in the wake of the COVID-19 pandemic, this deterioration appears to have had a very minor impact on the efficiency of labour market matching. Overall, a number of considerations suggest the simultaneous presence of labour market slack and shortages is likely to have been a temporary phenomenon. Labour shortages appear to be driven mainly by the labour market recovery and not by hampered labour market reallocation.

JEL-codes: E24 E32 J08 J21 J63 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2022-12
New Economics Papers: this item is included in nep-eec and nep-lab
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:euf:dispap:178

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