Labour demand in the wake of a shock: A dose–response approach

Abstract

This paper examines the impact of varying COVID-19 exposure levels on local labour demand in Italy during the first years of the pandemic. Using a dose–response framework and province-level monthly data on online job postings (NUTS3), we find a predominantly non-linear, negative relationship between COVID-19 exposure — measured by the contagion rate — and labour demand growth. However, at high exposure levels, a positive effect emerges, driven by increased demand for essential roles in Northern Italy. Our findings reveal significant regional disparities. Southern provinces experienced sharper declines in labour demand, despite lower exposure levels, reflecting their weaker economic structures and reliance on non-essential jobs. Conversely, Northern provinces with high exposure levels sustained a higher ratio of essential-to-non-essential vacancies, demonstrating greater economic resilience during the crisis. This study contributes to the literature by examining the underexplored effects of COVID-19 on labour demand in a European context, positioning Italy as a critical case study. It emphasises the pivotal role of essential jobs in mitigating economic disruption and highlights the Italian labour market’s non-linear responses to shocks and regional inequalities, offering insights into how sudden crises shape labour dynamics.