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Local Labour Market Resilience: The Role of Digitalisation and Working From Home

Author

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  • Sarra Ben Yahmed
  • Francesco Berlingieri
  • Eduard Brüll

Abstract

This article shows that digital capital and working from home were essential for the resilience of local labour markets in the context of the COVID‐19 crisis in Germany. Employment responses differed widely across local labour markets, with differences in short‐time work rates of up to 30 percentage points at the beginning of the pandemic. Using recent advancements in the difference‐in‐differences approach with a continuous treatment, we find that digital capital potential higher by one standard deviation led to a short‐time work rate that was lower by 1.5 percentage points on average at the onset of the shock. The effect was nonlinear, disproportionately disadvantaging regions at the lower end of the digital capital distribution. We also find that working from home potential led to lower short‐time work, especially during the first lockdown period. However, digital capital smoothed the employment shock beyond the effect of remote work, extending into 2021. Moreover, local digital capital potential increased the adoption of remote work after the shock.

Suggested Citation

  • Sarra Ben Yahmed & Francesco Berlingieri & Eduard Brüll, 2025. "Local Labour Market Resilience: The Role of Digitalisation and Working From Home," Journal of Regional Science, Wiley Blackwell, vol. 65(5), pages 1506-1532, November.
    • Handle: RePEc:bla:jregsc:v:65:y:2025:i:5:p:1506-1532
    DOI: 10.1111/jors.70013
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    Cited by:

    1. is not listed on IDEAS
    2. Benner, Niklas & Heuer, Felix & Kamb, Rebecca & Storm, Eduard, 2025. "Do economic crises reshape the skill content of Jobs? Evidence from organizational changes in the post-pandemic era," Ruhr Economic Papers 1195, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

    More about this item

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • 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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