Documents Botelho, Vasco 10 results

"In the aftermath of the COVID-19 pandemic, the euro area labour market showed remarkable resilience despite weak economic growth and various challenges, including supply chain disruptions, the energy crisis and geopolitical tensions. The relative strength of the labour market compared with economic activity led to a marked decline in measures of labour productivity. Factors such as reduced real wages, increased profit margins, lower average hours worked and strong labour force growth contributed to favourable labour market dynamics, encouraging firms to hire or retain workers. Looking ahead, there are signs of easing in the labour market as some of the factors sustaining employment subside, aligning labour market dynamics more closely with economic activity. Nevertheless, structural issues, such as declining average hours worked and labour force dynamics, may persist."

"This box examines regional developments in labour input within the euro area from 2007, the peak in economic activity before the global financial crisis, until 2018. It uses the regional labour market indicators available from the Annual Regional Database of the European Commission (ARDECO).[1] For the purposes of comparison, we divide regions into four distinct groups (or quartiles) according to the 2007 GDP per capita distribution in each country (see Figure A). These groups are fixed over time."

"This box analyses labour market developments in the euro area since the onset of the coronavirus (COVID-19) pandemic, contrasting the developments in business and consumer survey data with the main headline labour market indicators for the euro area. On the one hand, business and consumer survey data point to a strong deterioration in the euro area labour market since the introduction of the containment measures to limit the spread of the virus. On the other hand, the extensive margin of the labour market has shown a muted response, with both employment and unemployment adjusting moderately to the COVID-19 shock. The adjustment of the euro area labour market is occurring instead via a strong decline in the average number of hours worked per employed person, shaped by the widespread use of short-time work schemes in the euro area. These schemes have been successful in containing dismissals, supporting incomes and helping firms to effectively reduce their payroll costs and liquidity needs, while maintaining the worker-job relationship. However, the continued success of the widespread use of short-term work schemes in supporting the euro area labour market depends critically on the dynamics and duration of the crisis."

"This box examines high-frequency data to quantify the impact of the coronavirus (COVID-19) pandemic on both job postings and hiring patterns in the euro area. Prior to the COVID-19 crisis, both of these indicators had increased steadily year on year, reflecting a rise in the number of job findings in the euro area. However, both the Indeed job postings and the LinkedIn hiring rate have declined significantly since the onset of the COVID-19 crisis and the lockdowns, with the hiring rate bottoming out in May 2020. While the decline in the hiring rate was broad-based across sectors, the intensity of the COVID-19 shock is asymmetric, with sectors such as recreation, travel and manufacturing being more affected by the crisis than others, such as healthcare, software and IT services sectors. Based on the high-frequency information derived from the hiring rate, the implied unemployment rate is expected to peak during the second quarter of 2020 and to be around 2.3 percentage points higher than in February. Overall, the methodology and the high-frequency data used in this box allow for a timely assessment of developments in the euro area labour market. The use of job flows in and out of unemployment helps to enhance our understanding of the labour market adjustment during the current COVID-19 crisis."

"The euro area labour market has been severely hit by the coronavirus (COVID-19) pandemic and associated containment measures. Employment and total hours worked declined at the sharpest rates on record. Unemployment increased more slowly and to a lesser extent, reflecting the high take-up rate of job retention schemes and transitions into inactivity. The labour market adjustment occurred primarily via a strong decline in average hours worked. In addition, the labour force declined by about 5 million in the first half of 2020, which is half a million more than its increase between mid-2013 and the fourth quarter of 2019..."

"The influx of Ukrainian refugees is expected to lead to a gradual increase in the size of the euro area labour force. Back-of-an-envelope median estimates suggest that the influx of Ukrainian refugees could boost the euro area labour force by between 0.2% and 0.8% in the medium term, depending on the duration and the severity of the war. This would result in the labour force gaining between 0.3 and 1.3 million additional workers. However, labour market rigidities and other labour market frictions may slow down the integration process, with the result that Ukrainian refugees are likely to enter the labour force very gradually."

"Is digitalisation a massive gamechanger which will deliver huge gains in productivity, or is it more of a sideshow with only limited impacts? We use a large balance sheet panel dataset comprising more than 19 million European firm-level observations to empirically investigate the impact of digitalisation on productivity growth via various previously unexplored channels and mechanisms. Our results suggest that for two otherwise identical firms, the firm that exhibits on average a higher share of investment in digital technologies will exhibit a faster rate of TFP growth, but not all firms and sectors experience significant productivity gains from digitalisation. Digitalisation does not seem to have relatively stronger impacts on the productivity of frontier firms compared to laggards, nor does it help to turn laggards into frontier firms. Overall, firms should not regard digital investment as a ‘one-size-fits-all' strategy to improve their productivity. Digital technologies are a gamechanger for some firms. But they seem more like a sideshow for most firms, who attempt to be increasingly digital but are not able to adequately reap its productivity gains."

"We propose a Bayesian VAR model with stochastic volatility and time varying skewness to estimate the degree of labour at risk in the euro area and in the United States. We model the asymmetry of the shocks to changes in the unemployment rate as a function of real activity and financial risk factors. We find that the conditional distribution of the changes in the unemployment rate displays time-varying volatility and skewness, with peaks coinciding with the Global Financial Crisis and the COVID-19 pandemic. We take advantage of the multivariate nature of our parametric model to measure stagflation risk defined as the possible joint event of large increases in the unemployment rate and large annual rates of inflation. We find an increasing risk of stagflation for the euro area in 2022 while in the United States stagflation risk increased earlier in 2021 and started decreasing more recently. Notwithstanding the significantly high levels of inflation, stagflation risks have been contained by the resilient performance of the labour market in both areas. The degree of labour at risk is therefore important for the assessment of the inflation-unemployment trade-off."

"The productivity-enhancing effects of digitalisation have generated increased interest in the promotion of digital technologies. This report provides different estimations for euro area countries of the impact of digital uptake on productivity at firm level, showing that the adoption of digital technologies could lead to an increase in firms' productivity in the medium term. However, not all firms and sectors experience significant productivity gains from digital adoption, and not all digital technologies deliver significant productivity gains. The report highlights possible factors behind the low productivity benefits of digitalisation in euro area countries. For example, a lack of strong institutions and governance structures may help to explain why digital diffusion is slower than expected, why it is slower in some countries than others and why the expected productivity benefits from digitalisation have not been fully achieved by now. Furthermore, the report suggests that the full benefits of the digital revolution will be reaped by properly supplying skills to firms and also by investing in computerised information in low-productivity firms."