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Skills shortage and innovation

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  • Jens Horbach
  • Christian Rammer

Abstract

Skilled labour is a key input to the innovation process. A shortage in supply may impede innovation activities and result in lower productivity gains. While governments are concerned about these likely negative impacts, there is only limited empirical evidence whether and to what extent skills shortage affects innovation activities. The paper addresses this question using panel data from two waves of the German innovation survey. We measure skills shortage by job openings that could not be filled at all, not with the required skills or only with significant delay, distinguishing different skill levels. We analyse whether skills shortage is linked to stopping or abandoning innovation projects. Endogeneity issues are tackled by instrumental variable estimation techniques. Our results show that innovative firms are more likely to be subject to skills shortage, whereas skills shortage induces the cancellation of innovation projects.

Suggested Citation

  • Jens Horbach & Christian Rammer, 2022. "Skills shortage and innovation," Industry and Innovation, Taylor & Francis Journals, vol. 29(6), pages 734-759, July.
    • Handle: RePEc:taf:indinn:v:29:y:2022:i:6:p:734-759
    DOI: 10.1080/13662716.2021.1990021
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    Cited by:

    1. Paolo Carioli & Dirk Czarnitzki & Gastón P Fernández Barros, 2024. "Evidence on the Adoption of Artificial Intelligence: The Role of Skills Shortage," Working Papers of Department of Management, Strategy and Innovation, Leuven 735893, KU Leuven, Faculty of Economics and Business (FEB), Department of Management, Strategy and Innovation, Leuven.
    2. Paolo Carioli & Dirk Czarnitzki, 2023. "Skills Shortage and Innovation Openness," Working Papers of ECOOM - Centre for Research and Development Monitoring 720361, KU Leuven, Faculty of Economics and Business (FEB), ECOOM - Centre for Research and Development Monitoring.
    3. Birca Alic, 2023. "Assessing Organisations' Behaviour In The Tight Labour Market In The Republic Of Moldova," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 6, pages 23-31, December.
    4. Yuxuan Ma & Lei Wang & Di Hu & Yaoqing Ge & Junzhu Zuo & Tian Lan, 2023. "Analysis of spatial patterns of technological innovation capability based on patent data in Jiangsu province, China," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-10, December.

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