IMPLEMENTING CHANGE:

A NEW LOCAL AGENDA FOR

JOBS AND GROWTH In co-operation with the EU Presidency, Irish Government and Pobal

26-27 March 2013, Dublin-Kilkenny, Ireland

9th Annual Meeting

WORKSHOP G: DATA FOR POLICY DESIGN AND IMPACT ASSESSMENT

Sergio Destefanis Professor of Economics, Department of Economics, University of Salerno, Italy

Sergio Destefanis destefanis@unisa.it

(Università di Salerno and CSEF, Italy)

Measuring skills supply and demand - OECD LEED diagnostic tool and its application in selected regions

OECD-LEED 9th Annual Meeting

26-27 March 2013, Dublin-Kilkenny, Ireland

Outline

• The OECD-LEED diagnostic tool: definition and conceptual framework

• Background

• Applications Italy

USA

Ireland

• Some concluding remarks

The OECD-LEED diagnostic tool: definition

As part of its Skills for Competitiveness project, 2009-2011, the OECD LEED Programme developed a statistical diagnostic tool geared to understand the balance between skills supply and demand at the local level (TL3/NUTS3 or travel to work areas).

According to this approach, local labour markets can fall into four different situations: low skills equilibrium, skills shortages, skills surplus, high skills equilibrium.

SKILLS GAPS AND SHORTAGES

HIGH SKILLED EQUILIBRIUM

LOW SKILLED EQUILIBRIUM

SKILLS SURPLUS Dem

and

The OECD LEED diagnostic tool

Supply

SKILLS SURPLUS LOW SKILLED EQUILIBRIUM

SKILLS SHORTAGES HIGH SKILLED EQUILIBRIUM

Conceptual framework

Low % post-secondary education

High % high skilled occupations

High wages/high productivity

High % post-secondary education

High % high skilled occupations

High wages/high productivity

Low % post-secondary education

Low % high skilled occupations

Low wages/low productivity

High % post-secondary education

Low % high skilled occupations

Low wages/low productivity

Background

• The diagnostic tool has been tested within the Skills for Competitiveness project for Canada, Italy and the UK.

• As a contribution of the LEED programme to the OECD Skills Strategy, the diagnostic tool approach has been extended to localities in all OECD countries.

• Available online there are currently data for 12 countries: Belgium, Canada, Czech Republic, Denmark, Finland, Korea, Italy, Netherlands, Norway, Sweden, UK, USA

see skills.oecd.org

• Indicators for other countries (Australia, Austria, France, Greece, Hungary, Slovenia) are virtually ready.

Applications

There are various fundamental issues in implementing the diagnostic tool:

• What are the proxies of skills supply and demand?

• Do we select country-wide or sectoral medians in order to single out the quadrants?

• At which territorial level is the analysis to be carried out?

Below we illustrate some practical answers to these questions, also highlighting some examples from Italy, USA, Ireland.

Labour market performance according to the diagnostic tool typology – Italy 2001-2009

Skills supply and demand in Veneto and Campania (Italy) 2001

Skills supply and demand in Veneto and Campania (Italy) 2009

SKILLS SURPLUS LOW SKILLED EQUILIBRIUM

SKILLS SHORTAGES HIGH SKILLED EQUILIBRIUM

Correlates:

– (baseline case)

Correlates: “Attractive” university

Multinomial Logit model – Italy 2001 and 2009. What determines a province's location in a given quadrant?

Correlates: Strong 2-ary sector

Large population

Correlates: Strong 3-ary sector

Large population

Lower share of temps

“Attractive” university

Best practices #1

The Distretto Calzaturiero del Brenta • Involvement of many stakeholders: ACRIB (a local employers'

association), Politecnico Calzaturiero (private school of arts and crafts), local unions, universities.

• Vocational training for all skills levels

• Highly successful product innovation, enacted by a network of fairly small firms sharing costs

• It tied firms from Venezia and Padova in one single organisation, opened the way for cooperative mechanisms uniting employers and workers, and for the establishment of an innovative Territorial Council (Consulta Territoriale).

Best practices #2

• The 2011 Development Pact (Patto per lo Sviluppo...) from Treviso province.

• This is a young reality, also exemplifying what is happening in other areas (especially in Italy's North-east).

• It is characterised by territorial joint (NOT firm-level) wage bargaining and from a co-operative employers-worker approach to employment and development.

Skills supply and demand in metro areas – unemployment rate, 2011 - California

Skills supply and demand in metro areas – unemployment rate, 2011 Michigan

Skills supply and demand in Ireland, 2010

Skills supply and demand in Ireland, 2012

Concluding Remarks • The diagnostic tool proved useful in classifying local areas

• There seems to be a clear relationship between an area's position in the diagnostic tool and the unemployment rate. This chimes in with various pieces of concurrent evidence (e. g. Brookings Institution, 2012)

• A similar relationship with other performance measures is being tested

• Much will be gained from the comparison of different countries (with areas of different size), different proxies and analyses of the diagnostic tool distributions. Measures of dispersion may also be useful in this respect.