Characteristics and Drivers of the Swiss “Job Miracle”

Abstract

Switzerland's employment growth since the early 2000s was very high in both historical and international perspective, despite solid real wage increases and only moderate GDP growth. Yet, the reasons for the remarkable creation of jobs are largely unknown. We aim at filling this gap by studying the underlying characteristics and drivers of the Swiss "job miracle". We first outline the characteristics of the "job miracle" and show that the observed job growth correlates with a substantial increase in the labor intensity of economic activity. We then discuss five potential drivers of the unprecedented employment growth, which are consistent with the facts. Our empirical results suggest that immigration was the key factor in explaining the "job miracle" as it raised local demand and thereby triggered the creation of additional jobs.