Labour market effects of supply chain bottlenecks

During the COVID-19 pandemic there were supply chain bottlenecks all over the world with regard to raw materials and intermediate products. In this article, we examine how these constraints affected labour market development. For an empirical panel analysis, we combine survey data and administrative labour market data for economic sectors in Germany. We find effects on unemployment that are noticeable but still relatively limited. The effect on short-time work, on the other hand, is revealed to be considerable. Whilst short-time work is traditionally imposed where there are slumps in demand, our results show that it is also used in the case of adverse supply shocks. While inflation is rising, this explains why the Phillips curve does not shift outward.