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Slack vs. tightness in euro area labour markets: growing mismatch after COVID-19?

Author

Listed:
  • Aron Kiss
  • Alessandro Turrini
  • Anneleen Vandeplas

Abstract

This section aims to shed some light on post COVID-19 labour market developments across the euro area, notably on the simultaneous presence of signs of labour market slack and labour market tightness in late 2021. Indicators of labour market slack and mismatch are reviewed and discussed. The Beveridge curve relationship is estimated econometrically across euro area countries to assess if upward shifts took place after the COVID-19 outbreak, indicating a possible reduction in the efficiency of matching between jobs and job-seekers. The results indicate a modest upward shift in the Beveridge curves of the euro area in 2020, partly reversed in 2021. Despite the fact that skill mismatch increased somewhat in the wake of the COVID-19 pandemic, this appears to have had a very minor impact on the efficiency of labour market matching. Overall, the available results suggest that the simultaneous presence of labour market slack and tightness (shortages) was a temporary phenomenon. Labour shortages appear to be driven mainly by the labour market recovery and not by hampered labour market reallocation

Suggested Citation

  • Aron Kiss & Alessandro Turrini & Anneleen Vandeplas, 2022. "Slack vs. tightness in euro area labour markets: growing mismatch after COVID-19?," Quarterly Report on the Euro Area (QREA), Directorate General Economic and Financial Affairs (DG ECFIN), European Commission, vol. 21(2), pages 19-28, July.
    • Handle: RePEc:euf:qreuro:0212-02
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    File URL: https://economy-finance.ec.europa.eu/publications/quarterly-report-euro-area-qrea-vol-21-no-2-2022_en
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