Major new study into labour market challenges to be led by the Institute for Fiscal Studies, University College London, Central European University and NHH Norwegian School of Economics

We are delighted to announce a major new project to better understand the labour market challenges across Europe, funded by a prestigious €12.7 million ‘Synergy’ grant from the European Research Council. 

The project is led by Richard Blundell (IFS and UCL), alongside Fabien Postel Vinay (UCL, SMU, and IFS), Andrea Weber (CEU), and Kjell Salvanes (NHH). Key contributions will come from senior researchers Monica Costa-Dias (University of Bristol and IFS) and Attila Lindner (UCL and IFS). 

Bringing together an exceptional team, which additionally includes researchers from the Institut des Politiques Publiques in France and e61 Institute in Australia, this six-year project represents a major investment in developing new economic theory, measurement tools, and empirical evidence to deepen our understanding of labour markets. 

The core motivation for the project is that European countries (including the UK) face the twin challenges of both labour shortages in some areas (with declining workforces and employers finding it difficult to recruit skilled labour) and unemployment and under-utilisation of skills in other areas. These imbalances are important for productivity, the level and distribution of wages, and the provision of public services, and may be further exacerbated by recent technological developments.

The project is enormously ambitious in scope. We will develop new measures of skill and geographical imbalances in labour markets, investigate what drives labour shortages, and examine how the expectations of employers and workers shape how people look for jobs, how employers hire, and the skills workers acquire. We will also explore the role of regional and cross-border mobility in reducing these imbalances. We analyse whether supporting the mobility of workers with under-used skills, together with local investment in the skills employers need, could help further ease shortages. This research will draw on innovative cross-country data linkages, new surveys, and economic theories.

This project will not only provide new understanding of the challenges facing European labour markets. It will also provide essential ingredients for designing policy interventions to address labour shortages, mismatch and under-utilisation and generate new research infrastructure through cross-country linked datasets.

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Richard Blundell (Co- Director of the ESRC Centre for the Microeconomic Analysis of Public Policy at IFS, and David Ricardo Chair of Political Economy at University College London), who is Principal Investigator on the new project, said,  “It is a rare privilege to be awarded such a major grant from the European Research Council, and have the opportunity to lead an exceptional team to study one of the most important challenges facing European economies. The operation of labour markets are core to understanding productivity and inequalities, including regional inequalities. This project will not only have lasting impact through cutting-edge economic analysis, but also through developing a new generation of economic researchers on labour markets.”