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FOR 5675:  Labour market transformation: Scarcity, Mismatch, and Policy

Subject Area Social and Behavioural Sciences
Term since 2024
Project identifier Deutsche Forschungsgemeinschaft (DFG) - Project number 518302089
 
Labour market transformations change the nature of both labor demand and labor supply, leading to labour scarcity and skill mismatch if frictions prevent optimal adjustments to a new equilibrium. Labor scarcity and skill mismatch are set to become a major challenge confronting Germany and many other advanced economies. While the symptoms have been visible for decades, the imminent retirement of baby boomers will amplify the challenges - soon and dramatically. Tensions of labor scarcity are likely to be exacerbated by rapid changes in labor demand. Globalization and the digital transformation of economies have continuously and strongly affected the labor demand structure, changing the task composition of work and skill requirements. Among the recent drivers of these developments are innovations resulting from artificial intelligence and the ecological transformation of economies. Climate-related policies and regulations, like the EU Green Deal, alongside increased prices for carbon-intensive goods, alter production processes, thus also affecting demand for labor and skills. The effects propagate across the entire economy. Similarly, new digital developments affect most, if not all, areas of economic activity. Overall, these labor market transformations result in a mismatch between the skills required and skills supplied. The organization of firms and policy interventions play an important role in reducing labor scarcity and skill mismatch. Against this background, the goal of our Research Unit (RU) is to conduct research at the highest possible level, publishing and disseminating our findings. We aim to create the scientific foundations that will support policymakers in designing policies to address the skill mismatch and labor scarcity. We - a group of experts in the analysis of labor markets with the shared goal of informing policy based on empirical causal evidence - will join forces to provide a thorough understanding of the changes in the nature of work that are transforming labor markets. Moreover, we will offer causal evidence on mechanisms and policies that aim to reduce labor scarcity and skill mismatch, thus providing evidence on compliance with these policy measures. To provide causal evidence, we combine complementary methodologies, including micro-econometric evaluation techniques, randomized controlled trials, causal survey designs, and structural modelling. The research includes the most relevant policy areas when it comes to reducing labor market scarcity and skill mismatch: education, immigration, gender, family, and retirement policy. Further, the role of firms will be analyzed to identify avenues to improve training and the functioning of internal labor markets. These areas will not be considered in isolation, but in a collaborative effort examining interactions and spillover effects.
DFG Programme Research Units
International Connection Australia, France, USA

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