Identifying early warning signs of construction labor shortages

Construction labor shortages constrain project-level objectives and national development plans. The goal of this study is to utilize the lagged effects of macroeconomic conditions as early warning signs of construction labor shortages. To this end, the authors adopted a methodology, encompassing (1) retrieval of publicly available data and preprocessing of construction labor shortage as the target variable and macroeconomic measures as the explanatory variables, (2) identification of short-term associations between shortages and economic cycles using the Granger causality test, (3) examination of long-term relationships between labor shortages and economic conditions using the Johansen cointegration test, and (4) estimation of the impacts of economic conditions on labor shortages using the fixed-effects models. Results show that in the United States and Canada, interest rates and exports are the most significant leading indicators of construction labor shortages, with lags ranging from 12 to 15 months. Panel data analysis in the European Uinon and the United Kingdom reveals that a 1% increase in imports and building permits leads to increases in construction job vacancies by 1.19 and 0.63%, respectively, five quarters later. Findings highlight that by analyzing lagged macroeconomic indicators, construction practitioners can leverage the timely prioritize the strategies to mitigate labor shortages.