Working Paper: NBER ID: w20382
Authors: Peter Cappelli
Abstract: Concerns that there are problems with the supply of skills, especially education-related skills, in the US labor force have exploded in recent years with a series of reports from employer-associated organizations but also from independent and even government sources making similar claims. These complaints about skills are driving much of the debate around labor force and education policy, yet they have not been examined carefully. The discussion below examines the range of these charges as well as other evidence about skills in the labor force. There is very little evidence consistent with the complaints about skills and a wide range of evidence suggesting that they are not true. Indeed, a reasonable conclusion is that over-education remains the persistent and even growing situation of the US labor force with respect to skills. I consider three possible explanations for the employer complaints as well as the implications associated with those changes.
Keywords: skill gaps; skill shortages; skill mismatches; US labor market; education policy
JEL Codes: J08; J23; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| employer complaints about inadequacy of high school graduates' academic achievements (J24) | calls for educational reforms (I28) |
| calls for educational reforms (I28) | educational institutions are responsible for producing job-ready candidates (J24) |
| economic conditions (E66) | employer perceptions (M51) |
| employer hiring practices (M51) | employers report difficulties in hiring (J23) |
| perceived skill shortages (J24) | actual skill levels in the US labor market (J24) |
| overeducation is a more persistent issue than undereducation (J24) | perceived skill shortages (J24) |
| employers might be adjusting their expectations based on available labor supply (J29) | perceived skill shortages (J24) |