Labour Shortages and Wage Growth

Tight labour markets are usually accompanied by mounting wage pressures. Yet, in the past decade, growth has remained subdued despite appearance of widespread shortages. This paper re-examines market conditions since 2007 through lens a novel indicator, relative shortages (RLS), based on data from large representative business survey Sweden. Four main results emerge analysis: (1), time-series average RLS suggested much weaker during 2013–2019 recovery Great Recession and Covid-19 pandemic 2020 than qualitative surveys or vacancy-unemployment ratio. (2), reason is that contains time-varying intensive margin not recorded most surveys, which been trending downwards Recession. (3), fixed-effects regressions with several aggregate-, sector, region establishment-level controls confirm strongly positively correlated annual at establishment level. (4), sector-level Phillips curves show level can help explain sluggish Sweden