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This article examines the issue of labor shortages in various countries, particularly in OECD countries, and how the COVID-19 pandemic has exacerbated this problem. It discusses the factors contributing to labor shortages, such as temporary demand-driven shortages and shifts in the labor force. The article emphasizes the potential impact of labor shortages on global growth, trade, and inflation, especially in developing and emerging countries. It also explores the decline in average hours worked and its implications for labor market adjustment and wage growth. The article suggests that policymakers should focus on mobilizing untapped labor supply, improving skills, and promoting productivity through digital and green transitions. Additionally, it discusses the potential role of artificial intelligence (AI) in addressing labor shortages, but highlights the concentration of market power in the AI industry as a barrier. The article concludes that addressing labor shortages requires a comprehensive approach that considers various factors such as demographics, migration, education, and macroeconomic conditions. [Extracted from the article]

AI is transforming labor markets around the world. Existing research has focused on advanced economies but has neglected developing economies. Different impacts of AI on labor markets in different countries arise not only from heterogeneous occupational structures, but also from the fact that occupations vary across countries in their composition of tasks. We propose a new methodology to translate existing measures of AI impacts that were developed for the US to countries at various levels of economic development. Our method assesses semantic similarities between textual descriptions of work activities in the US and workers' skills elicited in surveys for other countries. We implement the approach using the measure of suitability of work activities for machine learning provided by Brynjolfsson et al. (Am Econ Assoc Pap Proc 108:43-47, 2018) for the US and the World Bank's STEP survey for Lao PDR and Viet Nam. Our approach allows characterizing the extent to which workers and occupations in a given country are subject to destructive digitalization, which puts workers at risk of being displaced, in contrast to transformative digitalization, which tends to benefit workers. We find that workers in urban Viet Nam, in comparison to Lao PDR, are more concentrated in occupations affected by AI, which requires them to adapt or puts them at risk of being partially displaced. Our method based on semantic textual similarities using SBERT is advantageous compared to approaches transferring AI impact scores across countries using crosswalks of occupational codes. [ABSTRACT FROM AUTHOR]

In this paper we present comparative evidence from OECD countries concerning the impact of labour market institutions and regulations on technological specialization. The interplay between the degree of labour market flexibility, the system of industrial relations and the knowledge base of different industries determines the viability of different human resource strategies, thereby shaping the patterns of comparative advantage. Our empirical results show that countries with coordinated industrial-relations systems and strict employment protection tend to specialize in industries with a cumulative knowledge base. We argue that two mechanisms explain these patterns. The larger the scope for resorting to internal labour markets, the lower the adjustment costs imposed by labour market regulation. Furthermore, employment protection and coordinated industrialrelations regimes, by aligning workers' and firms' objectives, encourage firmsponsored training as well as the accumulation of firm-specific competencies, allowing firms to fully exploit the potential of the internal labour market. [ABSTRACT FROM AUTHOR]

This article explores the impact of financial market regulation on jobs. It argues that understanding the impact of finance on labor markets is key to an understanding of the trade-off between economic stability and financial sector growth. The article combines information on labor market flows with indicators of financial market development and reforms to assess the implications of financial markets on employment dynamics directly, using information from the International Labour Organization (ILO) datatabse on unemployment flows. On the basis of a matching model of the labor market, it analyses the economic, institutional, and policy determinants of unemployment in- and out-flows. Against a set of basic controls, we present evidence regarding the relationship between financial sector development and reforms and their impact on unemployment dynamics. Using scenario analysis, the article demonstrates the importance of broad financial sector re-regulation to stabilize unemployment inflows and to promote faster employment growth. In particular, we find that encompassing financial sector regulation, had it been in place prior to the global financial crisis in 2008, would have helped a faster recovery in jobs. [ABSTRACT FROM AUTHOR]

The paper analyses the ambiguous role of house prices and housing investment for unemployment dynamics. Whereas traditional models see an increase in house prices as a dynamic multiplier that contributes positively to business cycle swings, the paper considers additional transmission mechanisms via the competitiveness channel (wages) and productivity. As house prices rise, wages tend to follow in order to make up for the loss in real disposable income, which limits employment creation. In addition, with rising house prices, the relative size of the construction sector - a low-productivity industry - tends to increase, lowering aggregate productivity growth, further dampening competitiveness. The paper estimates a stylised dynamic general equilibrium model with unemployment flows. Introducing different transmission mechanisms through which the housing market influences labour and macroeconomic dynamics, the size and direction of the housing market channel is being analysed. The estimation results show that housing shocks can have long-lasting negative effects on employment even though a housing boom can generate a short-lived stimulus on growth and employment. The paper also offers some policy advice simulating housing shocks under different types of structural reforms and macro-prudential regulation. [ABSTRACT FROM AUTHOR]

Earlier research on the links between economic growth and credit market development has abstracted from interactions between labour and financial markets. Moreover, most studies have analysed macro-finance linkages at the aggregate level, ignoring the decentralized nature of search and matching in labour and credit markets. This paper fills this void and thus allows for a more disaggregate analysis of policy effects. We show that the credit market exacerbates and accentuates the labour market effects, having amplifying effects on output, consumption, employment and welfare. Depending on the strength of the debt-dynamics, several growth dynamics emerge from this interaction between labour and credit markets with two distinct steady states: a stable growth regime and another one that is vulnerable and unstable. To test the empirical implications of the theoretical model, a multi-regime VAR (MRVAR) model is fitted to the US output and credit market data. The MRVAR estimation indicates that shocks to credit conditions during a high-growth period have markedly different effects than during a low growth and recessionary period. Also, there are substantial state-dependent asymmetries with respect to the sign of shocks to credit conditions, confirming the theoretical predictions. [ABSTRACT FROM AUTHOR]

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This article reviews the current state of research on unemployment dynamics in macroeconomic models. In particular, it discusses the increasingly widespread use of the labour-market flow approach as implemented via a search and matching process and presents main policy considerations that arise from this approach related to unemployment benefit systems and employment protection. It reviews the implications of the labour-flow approach for dynamic properties of macroeconomic models and discusses policy implications for macroeconomic and labour-market policies. Finally, it presents new evidence on the effectiveness of policies to influence unemployment in- and outflows. [ABSTRACT FROM AUTHOR]

The article discusses the application of micro-founded macroeconomic model to estimate the different effects of active and passive labour market spending on employment growth and the state of public finances.