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Doornik, Bernardus; Igan, Deniz; Kharroubi, Enisse
BIS Quarterly Review, 12/2023Magazine Article
The post-pandemic recovery features significant tightness in labour markets - a situation where jobs are plentiful and available workers scarce. This special feature discusses the possible role of supply and demand factors for this tightness and the attendant contrast between buoyant employment and lacklustre output growth. We find that labour hoarding on the demand side, and adverse demographic trends and pandemic-related preference shifts on the supply side, can go a long way in explaining these dynamics. Finally, we relate labour market developments and their persistence to the inflation outlook and monetary policy trade-offs.
