Labor Markets in Central Europe in Challenging Times

• Applicant: Professorin Dr. Kamila Cygan-Rehm
• Subject Area: Economic Policy, Applied Economics
• Term: since 2024
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 531021587

Recent years have brought several challenges to the stability of economies and labor markets, which particularly affected Central Europe. First, the Covid-19 pandemic posed a severe shock to employers and employees in terms of substantial restrictions for in-person meetings and large insecurities about the future. The immediate increase in flexible work arrangements (in terms of time and space) has potentially left persistent imprints on the way how individuals work and what skills they need to successfully adjust to the new working conditions. Second, the Russian invasion of Ukraine resulted in an unprecedented influx of Ukrainian refugees to Central Europe. This caused the necessity to absorb and integrate into local labor markets a substantial number of potential workers in a very short time. In this project, we evaluate how local labor markets in Central Europe dealt with these challenges and how these challenges transformed them. We propose three closely related lines of research that address original research questions, aim at filling important gaps in the literature, and push the research frontier on the topic. First, we study the effectiveness of policy measures aimed at mitigating the economic impact of the Covid-19 pandemic on firms and workers. We do so by evaluating the impact of a unique policy implemented in the Czech Republic in June 2020 on employment and the survival and performance of firms. Second, we estimate the long-run effects of the sudden increase in remote work on labor market trajectories and human capital accumulation of the affected workers. We pay particular attention to the potentially different impacts on men and women and compare the estimates for the Czech Republic and Germany, which substantially differ in female labor supply. Third, we evaluate the impact of Ukrainian refugees on the labor market outcomes of incumbent workers in several heavily affected countries (the Czech Republic, Germany, Poland, and Slovakia). Cross-country comparisons allow us to test the role of specific institutions in shaping the responses to the shock. Beyond the mere scientific interest, each of the subprojects deals with highly relevant issues from social, economic, and policy perspectives. The project aims at providing strong policy implications by using credible research designs that allow for a causal interpretation. For this purpose, we combine modern econometric techniques with high-quality data from administrative records and large-scale surveys, which are internationally outstanding in terms of sample size, the richness of information, and reliability. The research objectives can be achieved in the proposed framework.

• DFG Programme: Research Grants
• International Connection: Czech Republic
• Cooperation Partner: Klara Kaliskova, Ph.D.