This year‘s report addresses the future role governments and the challenges they are confronted with in post-pandemic times. It takes a broader perspective and relates the current situation to economic and political developments since the 1970s and examines whether and how the role of governments will change after the Covid-19 crisis.

The 20th EEAG report, entitled “Beyond the Coronavirus Crisis: Investing for a Viable Future” has been released. Economists from Europe and the US are calling for changes to the Next Generation EU (NGEU) package to repair the damage caused by the coronavirus crisis.

The corona pandemic has created a health and economic crisis without modern parallel. As it hit affected countries ill-prepared and spread quickly within the EU, member states had to adopt more interventionist approaches than ever before – particularly in the areas of fiscal and monetary policy, labor markets and redistribution, and industrial policy. EU member states started controversial discussions about how to support those that were hit particularly hard. This debate has become a litmus test for solidarity in the world's richest bloc of nations.

The decisions and measures taken in each country and at the European level will set the course for economic development in the coming years and shape the countries' long-term prospects for decades to come. This EEAG policy brief is a supplement to the group's usual annual report. The authors examine the various effects of the crisis, how Europe can react effectively and how political measures should evolve as the pandemic subsides. In addition, the authors analyze how an efficient supranational insurance mechanism might look like.

The Great Recession has strongly influenced employment patterns across skill and gender groups in EU countries. We analyse how these changes in workforce composition might distort comparisons of conventional measures of gender wage gaps via non-random selection of workers into EU labour markets. We document that male selection (traditionally disregarded) has become positive during the recession, particularly in Southern Europe. As for female selection (traditionally positive), our findings are twofold. Following an increase in the labour-force participation of less-skilled women, due to an added-worker effect, these biases declined in some countries where new female entrants were able to find jobs, whereas they went up in other countries which suffered large female employment losses. Finally, we document that most of these changes in selection patterns were reversed during the subsequent recovery phase, confirming their cyclical nature.