Labor Market Tightness in Advanced Economies

By Romain A Duval, Yi Ji, Longji Li, Myrto Oikonomou, Carlo Pizzinelli, Ippei Shibata, Alessandra Sozzi, Kirsi Silvennoinen, Marina Mendes Tavares

March 31, 2022

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Romain A Duval, Yi Ji, Longji Li, Myrto Oikonomou, Carlo Pizzinelli, Ippei Shibata, Alessandra Sozzi, Kirsi Silvennoinen, and Marina Mendes Tavares. Labor Market Tightness in Advanced Economies, (USA: International Monetary Fund, 2022) accessed November 8, 2024

Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary

Two years after the onset of the COVID-19 pandemic, a puzzle has emerged in several advanced economies: unfilled job vacancies have increased sharply even though employment has yet to fully recover. This note sheds light on three contributing factors, namely barriers to returning to work, changing worker preferences away from certain types of jobs, and sectoral and occupational job mismatch. The note also assesses the impact of labor market tightness on wage growth, showing that it has been large for low-pay jobs but milder overall. Bringing disadvantaged groups of workers into the labor force, including by controlling the pandemic itself, would ease labor market pressures while amplifying the recovery and making it more inclusive.

Subject: Health, Labor

Keywords: COVID-19, Employment, Global, Labor force, Labor Market Dynamics, Labor market tightness, Labor markets, Mismatch, Unfilled job vacancy, Vacancies, Wage growth, Wage inflation, Wage Phillips Curve, Wages, Worker preference

Publication Details

Pages:

45
Volume:

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DOI:

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Issue:

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Series:

Staff Discussion Notes No. 2022/001
Stock No:

SDNEA2022001
ISBN:

9798400204340
ISSN:

2617-6750

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