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Technology, Wages, and Skill Shortages: Evidence from UK Micro Data

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  • Haskel, Jonathan
  • Martin, Christopher

Abstract

Why have skill shortages continue to persist despite increases in training and the skill levels of the workforce? We argue that technical progress has raised the demand for skilled labour to match the observed increase in supply. We provide econometric evidence in support of this hypothesis, showing that skill shortages are higher for establishments that use advanced technology in the production process. We also provide econometric evidence that hiring difficulties are inversely related to the relative wage, as theory would suggest. Our results have clear implications for policy. If technological progress continues to be skill biased, policies that address skills deficiencies will only be successful if they produce a continual, rather than a temporary, increase in levels of skills among the workforce. Copyright 2001 by Oxford University Press.

Suggested Citation

  • Haskel, Jonathan & Martin, Christopher, 2001. "Technology, Wages, and Skill Shortages: Evidence from UK Micro Data," Oxford Economic Papers, Oxford University Press, vol. 53(4), pages 642-658, October.
    • Handle: RePEc:oup:oxecpp:v:53:y:2001:i:4:p:642-58
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    Citations

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    Cited by:

    1. tobias König & thomas Brenner, 2022. "Skill shortages and industry clusters – Empirical evidence from German establishment data," IAW Discussion Papers 140, Institut für Angewandte Wirtschaftsforschung (IAW).
    2. Anurag Banerjee & Parantap Basu, 2008. "Who pays for job training?," CDMA Conference Paper Series 0802, Centre for Dynamic Macroeconomic Analysis.
    3. Bellmann Lutz & Hübler Olaf, 2014. "The Skill Shortage in German Establishments Before, During and After the Great Recession," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(6), pages 800-828, December.
    4. Richard Fabling & David C. Maré, 2016. "Firm-Level Hiring Difficulties: Persistence, Business Cycle And Local Labour Market Influences," Journal of Labor Research, Springer, vol. 37(2), pages 179-210, June.
    5. Brunello, Giorgio & Wruuck, Patricia, 2019. "Skill Shortages and Skill Mismatch in Europe: A Review of the Literature," IZA Discussion Papers 12346, Institute of Labor Economics (IZA).
    6. Falk, Martin, 2001. "What drives the vacancy rate for information technology workers?," ZEW Discussion Papers 01-43, ZEW - Leibniz Centre for European Economic Research.
    7. Seamus McGuinness & Luis Ortiz, 2016. "Skill gaps in the workplace: measurement, determinants and impacts," Industrial Relations Journal, Wiley Blackwell, vol. 47(3), pages 253-278, May.
    8. Brenzel, Hanna & Müller, Anne, 2015. "Higher wages or lower expectations? : adjustments of German firms in the hiring process," IAB-Discussion Paper 201506, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    9. Mok, Penny & Mason, Geoff & Stevens, Philip & Timmins, Jason, 2012. "A Good Worker is Hard to Find: Skills Shortages in New Zealand Firms," Occasional Papers 12/5, Ministry of Economic Development, New Zealand.
    10. Brunello, Giorgio & Wruuck, Patricia & Maurin, Laurent, 2019. "Skill shortages and skill mismatch in Europe: A review of the literature," EIB Working Papers 2019/05, European Investment Bank (EIB).
    11. Pouliakas, Konstantinos & Wruuck, Patricia, 2022. "Corporate Training and Skill Gaps: Did COVID-19 Stem EU Convergence in Training Investments?," IZA Discussion Papers 15343, Institute of Labor Economics (IZA).
    12. Healy, Joshua & Mavromaras, Kostas & Sloane, Peter J., 2011. "Adjusting to Skill Shortages: Complexity and Consequences," IZA Discussion Papers 6097, Institute of Labor Economics (IZA).
    13. M. J. Andrews & S. Bradley & D. Stott & R. Upward, 2008. "Successful Employer Search? An Empirical Analysis of Vacancy Duration Using Micro Data," Economica, London School of Economics and Political Science, vol. 75(299), pages 455-480, August.
    14. Antonelli, Cristiano & Quatraro, Francesco, 2007. "Directed Technological Change and Total Factor Productivity. Effects and Determinants in a Sample of OECD Countries, 1971 – 2001," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 200711, University of Turin.
    15. Bellmann, Lutz & Hübler, Olaf, 2014. "Skill Shortages in German Establishments," IZA Discussion Papers 8290, Institute of Labor Economics (IZA).
    16. Suchandra Paul, 2018. "An Analysis of the Skill Shortage Problems in Indian IT Companies," Social Sciences, MDPI, vol. 7(9), pages 1-21, September.

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