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

Author

Listed:
  • Áron Kiss
  • Maria Chiara Morandini
  • Alessandro Turrini
  • Anneleen Vandeplas

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.

Suggested Citation

  • Áron Kiss & Maria Chiara Morandini & Alessandro Turrini & Anneleen Vandeplas, 2022. "Slack and Tightness: Making Sense of Post COVID-19 Labour Market Developments in the EU," European Economy - Discussion Papers 178, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:dispap:178
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    File URL: https://economy-finance.ec.europa.eu/publications/slack-and-tightness-making-sense-post-covid-19-labour-market-developments-eu_en
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    Cited by:

    1. Cardani, Roberta & Pfeiffer, Philipp & Ratto, Marco & Vogel, Lukas, 2023. "The COVID-19 recession on both sides of the Atlantic: A model-based comparison," European Economic Review, Elsevier, vol. 158(C).
    2. Gökten, Meryem & Heimberger, Philipp & Lichtenberger, Andreas, 2024. "How far from full employment? The European unemployment problem revisited," European Economic Review, Elsevier, vol. 164(C).

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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