Project Untangled

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Project Untangled




    Stehrer, a researcher at the Vienna Institute for International Economic Studies (wiiw), confirmed that investments in traditional assets such as transport equipment and machinery strongly affected employment growth. Contrary to popular beliefs about the destructive impact of automation on employment, Stehrer found that investments in digitalisation and intangibles, including databases, software, and R&D, did not destroy jobs, and had even a slight positive effect on labour demand.


    Moreover, the study shows a mixed effect of capital accumulation on labour income shares, with generally minor effects observed. However, software and databases positively impacted labour income and compensation shares.


    While the paper sheds light on the limited disruptive impact of new technologies on employment, it also emphasises the importance of enabling all workers to adapt to technological advancements. Hence, policy should concentrate on helping all workers engage with new technologies through training and skills development programs. These efforts could aid workers in learning new tasks and assist companies in implementing technological advancements.


    Furthermore, policymakers must ensure the fair distribution of productivity gains from these technologies, particularly considering the negative correlations associated with certain assets, such as machinery and R&D.


    Robert Stehrer, “The impact of ICT and intangible capital accumulation on employment growth and labour income shares”, Structural Change and Economic Dynamics, Volume 70, 2024, Pages 211-220.


    The earlier version of this paper is available here

    The paper is available here



    The policy brief from UNTANGLED, a three-year research project, highlights the challenges to Europe from an ageing population, labour market shortages, and skill mismatches. Migration from non-EU countries and internally within the EU emerges as a central theme in addressing these issues. Drawing on the project’s research findings, expert consultations, and stakeholder inputs, researchers identified policies that can be implemented, improved or need further consideration.


    “We should remember that migration can lead to job creation, improve productivity, stimulate innovation, and contribute to international trade,” said Klavs Ciprikis, co-author of the brief and researcher at ESRI. “The ageing of the EU population reinforces the need to recruit workers from outside the EU, so lawmakers should shape policies that help integrate them.”


    In recent years, member states have observed relatively high migration to the EU and within the bloc. UNTANGLED findings show that the education level of incoming workers varies significantly based on their region of origin, requiring tailored approaches to improve their adaptation and integration.

    Enhancing geographical mobility between European regions can efficiently address some labour market imbalances and improve economic performance, the UNTANGLED researchers found. They advocate for national-level financial incentives, including reimbursing regional mobility costs and supporting people moving to different areas. Additionally, they propose introducing preferential tax schemes to attract high-skilled foreigners, enhancing fiscal incentives.


    “Empirical evidence shows that tax incentives are an effective policy to encourage labour mobility, especially among high-income workers and professions with little location-specific human capital,” said Ronald Bachmann, co-author of the study and researcher at the RWI – Leibniz Institute for Economic Research. “Strengthening policies that offer residence and work permits for non-EU individuals to meet labour market demand will be crucial.”


    The researchers point to insufficient standardisation of qualifications requirements as one significant barrier to cross-border mobility. While this has improved in recent years, with the European Qualifications Framework playing a pivotal role in facilitating recognition of minimum requirements for authorisation to work in specific occupations across the EU, stronger implementation is needed, the researchers found.


    Improving recognition of foreign qualifications can help professions which struggle to fill vacancies, such as healthcare.


    Another major barrier to labour movement within the EU and the integration of immigrants is a lack of language proficiency, according to the policy brief.


    “Several EU member states provide publicly funded language courses,” said Klavs Ciprikis. “More countries must follow suit, ensuring free or affordable access to language training. It is impossible to overstate the role language skills play in the integration of migrants and their engagement in the labour market.”


    Another way to foster the societal integration of immigrants is to facilitate access to host country citizenship, the researchers found, adding that the liberalisation of birth-right citizenship also significantly improves the school performance of immigrants’ children.


    The full policy brief can be found here.

    2021 © UNTANGLED. All rights reserved.
    This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 101004776

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