The Skill Shortage in German Establishments Before, During and After the Great Recession

Abstract

SummaryThis paper investigates the development of skill shortages during the period 2007-2012. Using the German Establishment Panel of the Institute for Employment Research (IAB), we find differences across the years before, during and after the Great Recession. Furthermore, we analyze the importance of firm characteristics and that of certain, specific measures with respect to the skill shortage.The empirical analysis reveals that the relative skill shortage in the service sector during the Great Recession was more substantial than before and after 2009. The opposite pattern is observed for working time accounts. Firms with a high share of female workers typically experience usually less difficulty in finding qualified employees to fill jobs. However, during the Great Recession, the opposite was observed. Young firms facing competitive pressure, high wages, and without working time accounts that did not hoard skilled workers in the past tend to skill shortage. The estimations confirm that apprenticeship and further training serve to reduce the number of unfilled, high-skill jobs. It is also helpful when the firm has developed a plan for its personnel requirements. Other measures such as retaining older workers or hiring foreign workers were not successful. Ultimately, a skill shortage within a firm is often only a short-term phenomenon and less often observed over a longer period.