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The auto sector is macro-critical in many European countries and constitutes one of the main supply chains in the region. Using a multi-sector and multi-country general equilibrium model, this paper presents a quantitative assessment of the impact of global pandemic-induced labor supply shocks—both directly and via supply chains—during the initial phase of the COVID-19 pandemic on the auto sector and aggregate activity in Europe. Our results suggest that these labor supply shocks would have a significant adverse impact on the major auto producers in Europe, with one-third of the decline in the value added of the car sector attributable to spillovers via supply chains within and across borders. Within borders, the pandemic-induced labor supply shocks in the services sector have a bigger adverse impact, reflecting their larger size and associated demand effects. Across borders, spillovers from the pandemic-induced labor supply shocks that originate in other European countries are larger than those that originate outside the region, though the latter are still sizable.

Slovak Republic --- Macroeconomics --- Economics: General --- Labor --- Economic Theory --- Diseases: Contagious --- Industries: Automobile --- Demand and Supply of Labor: General --- Agriculture: Aggregate Supply and Demand Analysis --- Prices --- Externalities --- Health Behavior --- Automobiles --- Other Transportation Equipment --- Related Parts and Equipment --- Economic & financial crises & disasters --- Economics of specific sectors --- Labour --- income economics --- Economic theory & philosophy --- Infectious & contagious diseases --- Transport industries --- Labor supply --- Supply shocks --- Economic theory --- Spillovers --- Financial sector policy and analysis --- COVID-19 --- Health --- Automobile industry --- Economic sectors --- Currency crises --- Informal sector --- Economics --- Labor market --- Supply and demand --- International finance --- Communicable diseases --- Automobile industry and trade --- Covid-19 --- Income economics