Labor Market Tightness in Advanced Economies

Staff Discussion Notes, March 31, 2022

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Labor Market Tightness in Advanced Economies

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Bibliographic details

• Authors: Romain A Duval, Yi Ji, Longji Li, Myrto Oikonomou, Carlo Pizzinelli, Ippei Shibata, Alessandra Sozzi, Kirsi Silvennoinen, Marina Mendes Tavares
• Published: March 31, 2022
• Series: Staff Discussion Notes
• DOI: https://doi.org/10.5089/9798400204340.006

Summary findings

• Two years after the onset of the COVID-19 pandemic, unfilled job vacancies have increased sharply in several advanced economies even though employment has yet to fully recover.
• The note identifies three contributing factors to elevated vacancies:
  • barriers to returning to work;
  • changing worker preferences away from certain types of jobs;
  • sectoral and occupational job mismatch.
• The impact of labor market tightness on wage growth:
  • large for low-pay jobs;
  • milder overall.

Contributing factors (detailed)

• Barriers to returning to work:
  • These barriers are highlighted as a key reason for elevated unfilled vacancies despite incomplete employment recovery.
• Changing worker preferences:
  • Worker preferences have shifted away from certain types of jobs, contributing to difficulty filling vacancies in those occupations or sectors.
• Sectoral and occupational mismatch:
  • Mismatch across sectors and occupations is identified as a driver of vacancy increases and uneven employment recovery.

Impact on wages and wage growth

• Labor market tightness has been:
  • large for low-pay jobs;
  • milder overall.
• The note assesses effects on wage growth and references concepts such as the Wage Phillips Curve and wage inflation in its keyword set.

Policy recommendations and implications

• Bringing disadvantaged groups of workers into the labor force would:
  • ease labor market pressures;
  • amplify the recovery;
  • make the recovery more inclusive.
• Controlling the pandemic itself is explicitly mentioned as a measure that would help bring disadvantaged workers back into the labor force and relieve tightness.

Publication and metadata

• Authors: Romain A Duval, Yi Ji, Longji Li, Myrto Oikonomou, Carlo Pizzinelli, Ippei Shibata, Alessandra Sozzi, Kirsi Silvennoinen, Marina Mendes Tavares
• Date: March 31, 2022
• Series: Staff Discussion Notes No. 2022/001
• Issue: 001
• Volume: 2022
• Pages: 45
• DOI: https://doi.org/10.5089/9798400204340.006
• Stock No: SDNEA2022001
• ISBN: 9798400204340
• ISSN: 2617-6750
• 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

Staff Discussion Note — "Labor Market Tightness in Advanced Economies", March 31, 2022.

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