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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]

The rapid rise in unemployment since 2008 caused by the global financial crisis has created renewed interest in the effects of well-designed unemployment benefit systems on the speed at which labour markets recover and job creation resumes. On the basis of a newly-created database on labour market flows, this article makes use of a micro-founded macroeconomic model to estimate different effects of active and passive labour market spending on employment growth and the state of public finances. It demonstrates, in particular, that for the average advanced G20 country, spending on unemployment benefits yields employment gains both in the short-term and long-term that are superior to those observed for active labour market policies. Moreover, rather than tightening their budgets prematurely, advanced G20 countries would have fared much better in accepting further deterioration in public finances stemming from higher spending on social transfers in order to stimulate faster employment growth, which would have led to a more rapid recovery in the state of public finances as well. [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.