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In a Business Insider piece I read that:

Michael Madowitz, an economist at the Center for American Progress, says he is "unusually unsympathetic to the evergreen skills gap critique."

"First the Econ 101 'pay more for more if you want more' cuts against this well in a period of little wage growth," Madowitz said. "Second, there's fascinating/depressing empirical research showing a 'skills gap' occurs because employers add and remove qualifications for the same job postings depending on the labor market, ensuring there is always a skills gap."

(Emphasis mine.)

Unfortunately, the article has no further details on the latter research/issue to back up this statement that at least some of this "skill gap" is just employer advertisements vagaries, presumably regardless of what the job actually requires. And I'm curious if this is remotely quantifiable, i.e. how much of the "skills gap" in some sector (under study) turned out to be of this ad-based kind.

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  • $\begingroup$ I think the subject is not the question of whether there is or is not a skills gap (per se), or whether the skills gap is larger/smaller in one period (per se). Rather, that the data underlying the statistical indicator cannot be reliably used without additional interpretation, or more importantly requires some correction or additional analysis to make effective use of that data as a statistical indicator of a skills gap. $\endgroup$ – nathanwww Jun 20 '18 at 14:52
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I don't buy the explanation of this being vagaries of advertisements, regardless of the job.

Instead, I see it as employers showing rational and predictable flexibility in response to a changing supply of labour.

At times of plentiful supply, they can reduce recruitment costs by being far more selective at the first stage - filtering by essential requirements in the job ad. Finding good staff can be an onerous process. All the filtering stages after writing the ad are labour-intensive, and the labour is often line-managers and upwards, so not cheap. If I know I can get a decent number of interview candidates even with very stringent essential requirements, I'll do that, and that will reduce the number of applications that I have to process. This reduces my costs without significantly impairing the outcome.

At times of restricted supply, it's more cost-effective to advertise for lower essential requirements. That way, you cast a wider net, get more applicants, and are more likely to find a suitable candidate, without overwhelming the staff who have to read through the applications and process them.

As an occasional recruiter, I've done all this myself.

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  • $\begingroup$ Well, "vagaries" was my choice of word and probably not the best one. I found what seems to be another reference to the same data, and it (like your answer) points to intentionality: "Research done by the U.S. Federal Reserve revealed a nice tidbit: When there are lots of applicants, employers tend to raise their standards, hoping to score a way-above-average hire." $\endgroup$ – Fizz Jun 10 '18 at 19:11
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I agree with EnergyNumbers' answer but think that the underlying principle can be explained more simply. The idea of a "skills gap" does not make basic economic sense, because the economy does not have a fixed or identifiable demand for any particular set of skills.

Any task can be achieved in a variety of ways, using different combinations of resources. While we think more often about combinations of land, labour and capital, it's also possible to use different mixtures of low and high skilled labour to get something done.

In short, if somebody's perception of the "skills gap" were magically closed today by instantly improving workers' skills, then tomorrow firms would be talking about the new "skills gap" they'd need to close in order to achieve a new, higher level of productivity and output that they had now set their sights on.

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