Assessing the Impact of Skill Shortages on the Productivity Performance of High-Tech Firms in Northern Ireland

Abstract

This paper utilises data from skills surveys of firms in Northern Ireland for three industries; IT, Electronic Engineering and Mechanical Engineering. The purpose is to assess the extent to which the performance of high-tech firms are being constrained as a result of hard-to-fill and / or unfilled vacancies. Whist it was found that the determinants of skill shortage varied somewhat depending upon the definitional approach adopted, a high degree of correlation was found. It was found that both hard-to-fill and unfilled vacancies had reduced output per worker levels by between 65 and 75 per cent in affected firms, however, these impacts were only detectable after controlling for selection effects. These findings suggest that standard OLS procedures can generate highly misleading results in studies of this nature.