Adjustments of local labour markets to the COVID-19 crisis: The role of digitalisation and working-from-home

Sarra Ben Yahmed, Francesco Berlingieri and Eduard Brüll

No 22-031, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Employment responses to the COVID-19 crisis differed widely across German local labour markets at the beginning of the pandemic, with differences in short-time work rates of up to 20 percentage points. We show that digital capital, and to a lesser extent working-from-home, were essential for the resilience of local labour markets. Using an empirical strategy that combines a difference-in-differences approach with propensity score weighting, we find that local exposure to digital capital reduced short-time work usage by up to 4 percentage points and the effect lasted for about 8 months. Working-from-home potential lowered short-time work rates, but only in local labour markets exposed to digital capital, and in the first four months of the pandemic when a strict lockdown was in place. Differences in unemployment rates across local labour markets were at most 2 percentage points and did not depend on digital capital or working-from-home potential.

Keywords: COVID-19 crisis; Digitalisation; Employment; Information and communication technologies; Local labour markets; Short-time work; Working-from-home (search for similar items in EconPapers)
JEL-codes: J21 O3 R12 R23 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-eur, nep-ict, nep-lma and nep-ure
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:22031

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