One possibility is that there is a mismatch between the work that companies need done and the skills that workers have. As Peter Newland of Barclays Plc has said, “We believe that this divergence between openings and hiring is consistent with our view that some of the loss of employment during the recession was structural, rather than purely cyclical, in nature.”
Such a structural mismatch may well explain part of the gap, yet it seems unlikely that it explains most of it. After all, job openings in the retail trade have doubled over the past three years, while hiring has been flat. Is it plausible that we lack qualified workers for these jobs?
A second explanation is that employers are offering jobs at wages that are too low to attract good applicants. Alan Krueger, a labor economist at Princeton University who recently stepped down as chairman of President Barack Obama’s Council of Economic Advisers, believes this to be an important piece of the puzzle. He argues that the unemployment rate for those just recently out of work has now returned to roughly pre-crisis levels, and that people who have been out of the labor force for an extended period are exerting little downward pressure on wage rates. This combination means that, although the long-term unemployed still face a tough road ahead because they are essentially on the margins of the labor market, pressure is growing for higher wages for everyone else.
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Mismatch increased during the Great Recession. Mismatch can account for at most 2.72 percentage points of the 5.30-percentage-point increase in the unemployment rate from the beginning of the recession to the unemployment rate peak. Continue reading »
It is not easy to be young in the labour market today and skills mismatch is not helping them says ILO
The global youth unemployment rate, which had decreased from 12.7 per cent in 2009 to 12.3 per cent in 2011, increased again to 12.4 per cent in 2012, and has continued to grow to 12.6 per cent in 2013. This is 1.1 percentage points above the pre‐crisis level in 2007 (11.5 per cent). By 2018 …Continue reading »
Fixing labour shortages and enhancing the skills of workers will be the centrepieces of next week’s federal budget. But the government also recognizes that serious progress on matching skills with job openings will require close co-operation with provincial governments and the private sector. Businesses say labour shortages are also a top concern, and they want … Continue reading »
US unemployment seems stuck at an unusually high level of 8%, prompting some to suggest a widespread skills mismatch. This column argues that a skills mismatch is not supported by the evidence. Rather, out of the possible explanations, it seems that any shift in the ratio between unemployment and vacancies is driven by either lower … Continue reading »
A CIBC report released Monday suggests Canada’s economic prosperity is at risk due to a labour market split that sees high-demand positions go unfilled while lower-skilled workers languish in unemployment. “We have people without jobs and jobs without people,” said author and deputy economist Benjamin Tal. The mismatch of companies unable to hire and people … Continue reading »
Mismatch across industries and occupations explains at most one-third of the total observed increase in the unemployment rate reveals a study by the Federal Reserve Bank of New York Study
“We develop a framework where mismatch between vacancies and job seekers across sectors translates into higher unemployment by lowering the aggregate job-finding rate” write Aysegul Sahin, Joseph Song, Giorgio Topa, and Giovanni L. Violante in Mismatch Unemployment on newyorkfed.org. How much did mismatch contribute to the dynamics of U.S. unemployment around the Great Recession? To address this question, we … Continue reading »
It is those people who have not earned the minimum of a two-year degree that Scaglione says constitute a large population of our country who are stuck in low-skilled jobs that do not require any higher education. Low-skilled jobs that do not require a minimum of a two-year degree represent about 35 percent of all … Continue reading »