Structural unemployment II - Skills

Another definition of structural unemployment is based on skills. In this definition, unemployment is high because employers cannot find workers with the skills that they want. On the other side, job seekers do not have the skills that can do the job even though they want to work. Again, it is difficult to say how relevant this argument in the context of the current recession. If anything, the mismatch in skills is an underlying trend that has gone on before the recession and that the causality runs from skill mismatch to high unemployment rather than recession causing a skill mismatch.

The paucity of data makes it difficult to evaluate whether the current state of the economy is one of skill mismatch. There is little data on the skills demanded by employers. One source that has yet to be collected and mined thoroughly are job ads. The job ads speak directly to skills demanded. Another possible source is ONET but this website is a list of skills that BLS thinks that employers are looking for in an occupation.

For instance, ONET lists the following skills for an accountant:

• Active Listening — Giving full attention to what other people are saying, taking time to understand the points being made, asking questions as appropriate, and not interrupting at inappropriate times.
• Mathematics — Using mathematics to solve problems.
• Reading Comprehension — Understanding written sentences and paragraphs in work related documents.
• Writing — Communicating effectively in writing as appropriate for the needs of the audience.
• Critical Thinking — Using logic and reasoning to identify the strengths and weaknesses of alternative solutions, conclusions or approaches to problems.
• Speaking — Talking to others to convey information effectively.
• Judgment and Decision Making — Considering the relative costs and benefits of potential actions to choose the most appropriate one.
• Complex Problem Solving — Identifying complex problems and reviewing related information to develop and evaluate options and implement solutions.
• Time Management — Managing one's own time and the time of others.
• Active Learning — Understanding the implications of new information for both current and future problem-solving and decision-making.

Unfortunately ONET is not a reflection of the demand for skills in an economy. One ambitious study that evaluated the skill composition of the labor force is by Autor, Levy and Murnane (1993). The authors use the predecessor to ONET, the Dictionary of Occupational Titles to link skills to tasks to workers to industries to establish the effect of computerization on skills.

This study was an intuitive response to the effects of computerization which were already being felt in the 1980s. In the current recession, it would be hard to say that there is such a trend that is affecting skill demand. If anything a more ambitious study that actually tries to aggregate skill demand and supply would be needed to evaluate the mismatch argument.

Similar to those who argue that job losses in manufacturing and construction is causing structural unemployment, the skill based argument lacks any data whatsoever. Any argument based on skill mismatch must therefore collapse under the weight of available data (or lack thereof).