Regional patterns of skilled worker shortages and their causes

Background and Objective

Demographic aging in Germany tends to lead to a decline in labor supply. In conjunction with a net outmigration of young workers in particular, many rural regions, especially those in eastern Germany, have experienced a decline of their labor force in recent decades, in some cases sharply. On the one hand, this was associated with relieving effects on the labor market, which were reflected by decreasing unemployment rates. On the other hand, some indicators suggest that it has become more difficult for companies to fill vacancies with workers whose qualifications and skills match their needs. Model calculations indicate that these difficulties might further increase in the future.

Against this backdrop, we are interested in the extent to which companies in rural areas currently face skills shortages compared to those in metropolitan areas and whether the intensity of shortages differs across rural regions. In addition, we would like to understand whether systematic differences in regional skilled labor shortages are related, on the one hand, to the occupational structure of rural areas, for example, to a relatively high share of crafts occupations, a labor market segment in which there are particularly large numbers of vacancies per job seeker in Germany. On the other hand, we ask whether skilled labor shortages in rural areas differ from those in agglomerations, irrespective of regional economic specialization, and what role other structural differences play.

Approach

Using secondary data, we examine in the first subproject to what extent indicators such as the share of vacancies in all jobs or the duration until vacancies are (re)filled point towards an increase in (regional) skill shortages overall or in individual economic sectors. We are particularly interested in systematic differences between rural and more densely populated regions, in which regions are particularly affected, and in the role of the occupational structure of rural areas.

In the second subproject, we investigate possible reasons why shortages of skilled workers vary regionally. An important issue here is the immigration of skilled workers from abroad. We are interested in which regions skilled workers from abroad move to often and seldom, and in the characteristics of firms that primarily recruit foreign skilled workers. Furthermore, we analyze whether immigrant skilled workers tend to stay in the regional labor market in which they started working after their immigration from abroad, or whether they quickly move to other regions in the destination country.

Data and Methods

The analyses are based on data from the Federal Employment Agency, the Integrated Employment Biographies (IEB) and the Establishment History Panel (BHP) of the Institute for Employment Research (IAB). For supplementary analyses, data from the IAB Job Vacancy Survey can be used. The analysis will make use of distribution measures and regression analyses.

Our Research Questions

• Are rural regions affected by shortages of skilled workers to a similar, weaker or greater extent than more densely populated regions?
• Which rural regions are particularly affected?
• In which occupations is the (relative) shortage particularly pronounced and does the occupational structure of rural areas aggravate the relative affectedness or does it have a relieving effect?
• Which regions and companies recruit skilled workers from abroad more frequently than other regions or companies?
• Do skilled workers from abroad increase the labor supply of a region also in the longer term?

Preliminary Results

Based on the project, we expect to gain new insights into the relative extent to which rural regions are affected by shortages of skilled workers and the reasons behind regional differences in skills shortage.

Links and Downloads

Project at the IAB: https://iab.de/en/project/?id=13266295