The impact of skills shortage on economic development in Germany – A mixed method approach

In Europe, there is an increasing shortage of skilled workers and jobs remain vacant for long periods of time. The shortage of skilled workers has become a key issue for various stakeholders, as it not only makes it difficult to recruit and retain employees, but it is also seen as a significant barrier to innovation for companies. So far, most analyses of skills shortage take place at company level. We supplement this with a regional perspective, because many measures, especially those of policy makers, are conducted on the regional level. We examine the impact of qualification shortage on various aspects of regional economic development. Using the spatial vector auto-regressive panel model we do not detect direct effects on the regional economy, but rather indirect long-term effects due to movements of investments to neighboring regions, less radical innovations and few firm foundations. Expert interviews are used to dig deeper into the reasons for these findings, showing that the disadvantages of qualification shortages on economic development and innovativeness are perceived, but relate to the future or specific parts of the economy.