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Ongoing project

Labor Demand in Crisis and Recovery

How has the coronavirus affected the labor market in Norway and the demand for labor?

Project period November 2020 - October 2022
Project nr. 10508
Project leader Erling Barth

Project Background

The health crisis caused by the outbreak of the COVID-19 virus led to the largest market disruption in modern times. Supply chain problems, temporary closing of factories, travel restrictions, administrative closures and stay-at-home orders led to a massive fall in the global economy.

The stock markets worldwide crashed, and unemployment levels rose to unprecedented levels. Statistics Norway forecasts that GDP in Norway will decline by 5.5 percent in 2020. After the government issued strict measures of social distancing along with several measures to extend unemployment insurance coverage and increase benefit levels, the unemployment rate rose by 360 percent in three weeks (NAV 2020).

As the current economic crisis is caused by a global pandemic, it is not obvious that we can draw on experiences from previous recessions. A key question is how the labor market will recover from this health- and economic crisis.

Project Aim

This project analyzes labor demand changes through the crisis, with specific focus on conditions for recovery.

  • The primary objective is to compare online job vacancy postings, and actual job flows such as hires, separations, and net job growth, during the corona crisis and beyond. We will use real-time monthly data on job flows and compare the trajectories from 2020, to pre-crisis observations from the same months from 2018 and 2019, by occupations, industries, and regions. We compare these trajectories to the development of vacancies and job flows in Sweden, Denmark, and the US, with highly different policy responses (comparing between the Scandinavian countries), and different institutional framework in the labour market and the welfare state (US vs Scandinavia). The
  • Secondary objective is to analyse how the crisis impacts productivity growth, job reallocation, inequality, and polarization in the labour market.

Project Approach

The project consists of three work packages:

Workpack 1: 

In the first work package, we start out by tracking changes in job vacancy postings, hires, separations and job growth following the outbreak of COVID 19. We compare the trajectories from 2020, to pre-crisis observations from the same months from 2018 and 2019, by occupations, industries, and regions. These analyses will be in “real-time” drawing monthly data at half- or yearly intervals from the fall of 2020. We follow both online job vacancy postings, hires, separations and job growth. The focus in the initial phase will be to study the development of occupations, industries, and regions that are most likely to be affected by the political measures and behavioral responses by individuals and firms, with characteristics such as direct human contact, travel and transport dependency, conditions for home- and teleworking etc. In the next phase it will be important to identify spillover effects to other industries and occupations, and the responses to new challenges in the aftermath of the pandemic, such as likely drops in domestic and international demands, broken international value chains, a decline in oil prices, a possible financial crisis, and so on, that again is likely to change the trajectories of labor demand.

Workpack 2:

In the second work package, we add data on labor productivity of firms, and analyze how the crisis impacts productivity growth, job reallocation, inequality, and polarization in the labour market. We depart from underlying trends in productivity and changes in relative demand for different types of labour, and study the extent to which these trends are magnified or ameliorated during the different phases of the downturn.

Workpack 3:

The third work package is comparative. We use nearly real-time data on job postings in Norway, Sweden, Denmark and the US, coupled with nearly real-time data on new hires, new separations and net job growth, we will map labor demand from January 2020, into the crisis and onwards

Participants

ParticipantDegree PhoneE-mail
Erling Barth Research Professor Dr. polit. +47 930 91 410 erling.barth@samfunnsforskning.no
Harald Dale-Olsen Research Professor Dr. polit. +47 482 83 527 +47 958 08 463 harald.dale-olsen@samfunnsforskning.no
Pål Schøne Research Professor PhD +47 986 22 125 pal.schone@samfunnsforskning.no
Kjersti Misje Østbakken Research Director, Work and Welfare PhD +47 991 62 556 k.m.ostbakken@samfunnsforskning.no
Lena Hensvik (Uppsala University)
Lars Skipper (Aarhus University)
Richard Freeman (NBER/Harvard)

Publications

  • Erling Barth; Pål Schøne; Harald Dale-Olsen & Kjersti Misje Østbakken (2021). The rise and fall - labor demand during COVID-19.

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Published Jan. 26, 2021 2:34 PM - Last modified Jan. 26, 2021 2:49 PM