Recent Developments in the European Labor Market

This project will investigate how workers' labor supply has changed since the pandemic's onset and the underlying reasons for these changes. Individuals may alter/reduce their labor supply patterns for several reasons, e.g., due to (i) continued disruptive childcare/schooling, (ii) incapacity due to Long-Covid, (iii) current employment has become too stressful, or because the pandemic has permanently altered their (iv) preferences governing the trade-off between working hours (i.e., consumption) and leisure, or (v) their job preferences for flexibility. Effective policy-making requires knowledge of what motivations are underlying observed changes in labor supply behavior, as the differing underlying motivations would each require very different policy responses.
This project's second objective addresses how to decrease the labor supply shortage in Germany. Empirical evidence shows that the employed skilled workers have significantly decreased their working hours since the onset of the pandemic, and the average number of hours worked by the employed remains below pre-pandemic levels. Conducting a survey experiment (with various treatments), we aim to find sector-specific solutions. We will investigate how firms could increase their current part-time employees' labor market participation (hours worked). In addition, we explore with an experiment what keeps skilled workers in the "hidden reserve" and how to incentivize them to join the labor force.