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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

We show 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 pre-crisis digital capital potential reduced short-time work rate by up to 3 percentage points. The effect was nonlinear, disproportionately disadvantaging regions at the lower end of the digital capital distribution for a longer period. One channel of impact is working from home, which was more often adopted in regions with higher digital capital. But digital capital smoothed the employment shock beyond the effect of remote work.

Suggested Citation

  • Sarra Ben Yahmed & Francesco Berlingieri & Eduard Brüll, 2024. "Local Labour Market Resilience: The Role of Digitalisation and Working from Home," CESifo Working Paper Series 11114, CESifo.
    • Handle: RePEc:ces:ceswps:_11114
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    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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