Has COVID-19 Induced Labor Market Mismatch? Evidence from the US and the UK

January 19, 2022

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Format: Chicago

Carlo Pizzinelli, and Ippei Shibata. Has COVID-19 Induced Labor Market Mismatch? Evidence from the US and the UK, (USA: International Monetary Fund, 2022) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper studies whether labor market mismatch played an important role for labor market dynamics during the COVID-19 pandemic. We apply the framework of S¸ahin et al. (2014) to the US and the UK to measure misallocation between job seekers and vacancies across sectors until the third quarter of 2021. We find that mismatch rose sharply at the onset of the pandemic but returned to previous levels within a few quarters. Consequently, the total loss in employment caused by the rise in mismatch was smaller during the COVID-19 pandemic than during the Global Financial Crisis. The results are robust to considering alternative definitions of job seekers and to using a measure of effective job seekers in each sector. Preliminary evidence suggests that increased inactivity among older workers, the so called She-cession (particularly in the US) and shifting worker preferences amid strong labor demand are more prominent explanations for the persistent employment shortfall vis-à-vis pre-COVID levels.

Subject: COVID-19, Employment, Financial crises, Global financial crisis of 2008-2009, Health, Labor, Labor force, Labor markets, Unemployment

Keywords: COVID level, COVID-19, Employment, Employment loss, Global, Global financial crisis of 2008-2009, Labor force, Labor Market Dynamics, Labor market mismatch, Labor markets, Mismatch, North America, Sectoral Reallocation, UK vacancy, Unemployment, Vacancy share

Publication Details

Pages:

48
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2022/005
Stock No:

WPIEA2022005
ISBN:

9781616359027
ISSN:

1018-5941

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