Examining the determinants and consequences of skill gaps within firms. ESRI Research Bulletin 2016/2/4

Skill gaps exist when the skill levels of workers are insufficient to meet the requirements of their job. There is a distinct lack of research in this area, which is surprising given that skill gaps represent a primary motivating factor in the training investment decisions of both firms and workers; furthermore, skill gaps are believed to negatively impact firm level performance and worker earnings and career progression. In addition, given that skill gaps among workers can be measured through both worker and employer surveys, little is known about the degree of accuracy of or the correlation between both measurement approaches. The paper exploits some novel aspects of the Irelands 2006 National Employment Survey (NES) to address two central gaps in the literature, namely: (1) To assess the determinants and relationship between skill gaps, measured from the perspective of both employers and employees, in order to draw conclusions regarding the main drivers of the accurate recognition of training requirements within firms. (2) To determine the degree to which skill gaps affect training expenditures and firm-level performance