Employment and Labour Participation in the Post-COVID-19 EU: A Regional Analysis Using LFS and Online Job Data

Abstract

This article investigates new job creation across European Union regions in 2022 and the endogenous changes in labor market participation following the COVID-19 outbreak. We jointly model new hires in 2022 and shifts in participation between 2021 and 2022 using demand-side predictors, which are rarely applied in supply-oriented studies due to limited institutional data. The analysis combines official CEDEFOP data on job advertisements posted on online portals across the EU in 2021—disaggregated by region and occupation—with the Labor Force Survey, which provides information on new hires and regional or institutional determinants affecting both outcomes. We employ recently developed sample selection models with copulas, allowing for flexible dependence structures, and include pseudo-random effects to account for the hierarchical nature of regions nested within states. To our knowledge, this is the first study to examine post-COVID-19 employment creation for all European Union regions using such models integrating survey and online job advertisement data. The results show that, although regions with strong adult lifelong learning systems are better positioned to generate new employment opportunities, job creation has been primarily driven by rising demand for medium- and low-skilled occupations, thereby stimulating participation. New employment is concentrated in regions with lower shares of technology-skilled workers, regardless of tertiary education levels, indicating a structural shift in the post-pandemic labor market. The determinants of regional job creation differ sharply between Old and New Member States, suggesting distinct policy challenges and priorities.