Lost opportunities: measuring the unrealized value of skill vacancies in Canada

When an employer is hiring, they are looking for a set of skills to complete a series of tasks. Until the employer can recruit a new employee, the needed skills remain missing. Job vacancies can thus be thought of as skill-set vacancies, or as unfilled skills demand. Such sought-after skills are valuable. Salaries or wages reflect, in part, how valuable a certain skill set is to an organization. So, we can define the value of skill vacancies as the unrealized monetary value when a vacancy for particular skills goes unfilled.

By combining information on job vacancies, the skills profiles of those vacant jobs, and typical wages per role, we are able to assess the aggregate cost of skill vacancies to the Canadian economy. We can then observe the value of skill shortages by looking through the lens of occupational data and computing the unrealized wages owing to vacant skills. We further explore the fact that skills tend to correlate together in clusters. Such skill groups give us insight into the importance of training more than one skill at a time. The relative vacancy values of these groups should help prioritize policy and educational investments to address those gaps and, in doing so, to recapture some of the lost economic value.

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