Browsing by Subject "labor demand and supply shocks"

This thesis aims to identify and measure labor demand and supply shocks caused by COVID-19 in Finland in 2020 and aims to replicate results from an earlier study by Brinca et al. in 2021. The method utilized is a model estimation on a Bayesian structural vector autoregression framework on quarterly data of hours worked and real wages by work sector. In order to capture the labor market dynamics in Finland within the framework, a literature review is conducted and the theory and methods are then outlined. Informative priors and literature-based parameters are established for the model, and analysis software computation is then used to and estimate the model. The model estimations show that most sectors suffered large negative supply and demand shocks in the first quarter of 2020, with significant heterogeneity between sectoral shock response. It is assessed that sectors with greater possibilities of remote work are less affected by the shocks than sectors of high-contact work. Labor supply shocks account for over 80% of the total shock effects. In the second quarter of 2020, most sectors, in turn, experienced large positive supply and demand shocks that affected the sectors with significant heterogeneity once more, with the previous quarter’s most affected sectors again experiencing the largest shocks. Labor supply shocks again accounted for around 80% of the total shock effects. The results in this thesis share a trend with the earlier study in sector heterogeneity and the shocks’ total impacts, but find an increased share in the effect of labor supply shocks on the total impact of the COVID-19 shocks.