Improving regional macroeconomic skills matching: A RHOMOLO analysis

Jobs are becoming increasingly skill-intensive due to ongoing trends such as globalisation, digitalisation, and demographic change. There is a need to promote a good match between the demand and the supply of skills, as the existing evidence suggests that skills mismatch negatively affects productivity and economic growth. Effective education and lifelong learning policies, together with active labour market policies, can address skills mismatches. This Insight presents a RHOMOLO analysis of the impact of a permanent 10% reduction in the macroeconomic skills mismatch indicator in the regions of the European Union (EU) with a large level of mismatch. The simulations suggest that a hypothetical policy reducing skills mismatches in those regions would generate increases in regional GDP of between +1.4% and +3.6% in the long run. The model simulations suggest that the economic benefits would spill over to the rest of the EU regions.