Skill shortages and skill mismatch in Europe : a review of the literature

This paper reviews the recent economic literature on skill mismatch and skill shortages with a focus on Europe. The review starts with a conceptual overview of skill mismatch and skill shortages and how to measure them. An issue discussed in the first section is the measurement of job requirements, i.e. a demand side variable, that some authors compute using surveys of individuals, which typically collect information on the supply side (educational attainment, foundation skills). Individuals, however, do not often have a reliable view of job requirements, and may actually have an incentive to inflate them. Another issue is whether skill shortages stated by employers reflect the lack of suitable candidates among job seekers or are due instead to the wage and working conditions being offered.