This paper investigates the determinants of firms’ external skill shortages – that is, vacancies that are hard to fill for skillÂrelated reasons. This paper utilises a speciallyÂdesigned survey, the Business Strategy and Skills (BSS) module of the Business Operations Survey 2008 (BOS 2008). We estimate the determinants of firms reporting having vacancies and skill shortage in comparison to the nonÂskillÂrelated vacancies using probit models and twoÂstage (Heckman) probit models with selection, to enable us to distinguish between those factors related with the firm posting a vacancy and those that make them difficult to fill. We consider a broad suite of variables, including firm’s size and industry, their market focus, R&D investment, innovation, previous performance (e.g. productivity), the degree of competition they are subject to
