Identifying and responding to skills shortages

Skills shortages limit economic growth. Tight labor markets in the United States have highlighted for policy–makers the problems that skills shortages create for the economy. Yet, it is difficult to document and respond to skills shortages. No single, direct measure identifies a skills shortage. Identification requires multiple economic indicators. When skills shortages are identified, prescription of responses to alleviate shortages is equally problematic. Selection of investment in training as one response requires that other factors affecting labor supply and price must be ruled out as contributing causes of shortages