Skill shortages and structural unemployment in Britain: a (mis)matching approach

Media discussion of British unemployment often focuses on the low level of training and vocational skills of the British workforce compared to that of Britain's main industrial competitors. In a world increasingly dominated by the use of robots and other electronic aids to production, traditional manual jobs are harder to come by. It is hardly surprising, so the argument goes, that 1980s' unemployment has been heavily concentrated amongst the unskilled and untrained, while those with computer skills and the like have been in heavy demand – there is, in other words, a growing mismatch between the supply of, and the demand for, different types of labour. Yet academic research on the nature of Britain's unemployment has generally failed to lend support to the idea that technological change has been a significant factor (for example, Layard and Nickell, 1986). Inadequate skills may have much to do with low productivity and low wages, but relatively little to do with high unemployment. Is the casual empiricism misguided, or has academic research missed the point? The purpose of this study is to have another look at the question, invoking microeconomic evidence.