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Adjustments of local labour markets to the COVID-19 crisis: The role of digitalisation and working-from-home

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  • Ben Yahmed, Sarra
  • Berlingieri, Francesco
  • Brüll, Eduard

Abstract

Employment responses to the COVID-19 crisis differed widely across German local labour markets at the beginning of the pandemic, with differences in short-time work rates of up to 20 percentage points. We show that digital capital, and to a lesser extent working-from-home, were essential for the resilience of local labour markets. Using an empirical strategy that combines a difference-in-differences approach with propensity score weighting, we find that local exposure to digital capital reduced short-time work usage by up to 4 percentage points and the effect lasted for about 8 months. Working-from-home potential lowered short-time work rates, but only in local labour markets exposed to digital capital, and in the first four months of the pandemic when a strict lockdown was in place. Differences in unemployment rates across local labour markets were at most 2 percentage points and did not depend on digital capital or working-from-home potential.

Suggested Citation

  • Ben Yahmed, Sarra & Berlingieri, Francesco & Brüll, Eduard, 2022. "Adjustments of local labour markets to the COVID-19 crisis: The role of digitalisation and working-from-home," ZEW Discussion Papers 22-031, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:22031
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    Cited by:

    1. Axenbeck, Janna & Bertschek, Irene & Breithaupt, Patrick & Erdsiek, Daniel, 2023. "Firm digitalisation and mobility - Do Covid-19-related changes persist?," ZEW Discussion Papers 23-011, ZEW - Leibniz Centre for European Economic Research.
    2. Gathmann, Christina & Kagerl, Christian & Pohlan, Laura & Roth, Duncan H.W., 2023. "The Pandemic Push: Digital Technologies and Workforce Adjustments," IZA Discussion Papers 16062, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    COVID-19 crisis; Digitalisation; Employment; Information and communication technologies; Local labour markets; Short-time work; Working-from-home;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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