Monetary Shocks and Labor Markets: Evidence from Online Job Vacancy Postings

IMF Working Papers, March 28, 2025

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Canonical URL: Monetary Shocks and Labor Markets: Evidence from Online Job Vacancy Postings

Objective: Investigate the impact of monetary policy on labor markets using daily online job vacancy postings.
Identification strategy: Exogenous monetary shocks identified with the ‘interest rate surprise’ approach based on high-frequency changes in forward-looking interest rates.
Data scope: Daily online job vacancy postings for three European countries (Estonia, Latvia and Lithuania) during the period 2018–2024.

Directional impact:
- A contractionary monetary policy shock leads to a persistent decline in online job vacancy postings.
- An expansionary monetary policy shock leads to a persistent increase in online job vacancy postings.
Magnitude and timing:
- Across all countries, the average effect amounts to about 2 percent in 15 days after a contractionary monetary policy shock (i.e., an unanticipated increase of 1 percentage point in short-term interest rates).
Cross-country heterogeneity in magnitude and persistence:
- Latvia: 0.5 percent
- Estonia: 2 percent
- Lithuania: 3.2 percent
Policy implication: Monetary policy decisions have significant and durable effects on labor-market conditions as measured by online job vacancy postings and are therefore important for policymakers and the transmission of monetary policy.

Monetary policy is not neutral for labor-market outcomes; rate surprises affect vacancy posting behavior within days.
Heterogeneous country responses imply that a common monetary shock can produce varied labor-market effects across countries, relevant for policymakers monitoring labor-market transmission and designing complementary policies.

Source: IMF Working Paper "Monetary Shocks and Labor Markets: Evidence from Online Job Vacancy Postings" (March 28, 2025).