On Measuring Labor and Job Shortage by Occupation

Popular indicators used to measure labor and job shortage across occupations in Switzerland typically compare the stocks of job openings and unemployed observed in these professions. According to this approach, labor shortage prevails when the number of vacancies in an occupation exceeds the number of jobseekers, and job shortage when the opposite holds. We show that this approach is deficient in a number of ways and develop a new approach that avoids these shortcomings. In addition, we demonstrate that our approach outperforms current methods in capturing the labor market turbulences that followed in the wake of the Covid-19 pandemic. JEL classifications: C41, J64