This study investigates the importance of global value chain (GVC) integration for local labor market outcomes in Germany during the COVID-19 pandemic. Although COVID-19 can be considered as a global crisis, there are at the same time strong geographical differences in its impact. We observe pronounced spatial variation in infection rates, policy responses, and behavioral changes. A rapidly growing number of studies provide evidence of heterogeneous effects of the COVID-19 pandemic on local labor markets, most of them focusing on the initial shock and often on the effects of lockdowns and economic policy measures. This paper takes a different perspective on the regional economic effects of the pandemic. We focus on the impact of disrupted GVC during the COVID-19 crisis on local labor markets and investigate whether GVC integration influenced the magnitude of the initial shock and the subsequent recovery process of regions in Germany until December 2021.
IAB Research Report (IAB-Forschungsbericht) 10/2023: Local labor market effects of global value chain disruptions - evidence from the COVID-19 crisis