Why have skill shortages continue to persist despite increases in training and the skill levels of the
workforce? We argue that technical progress has raised the demand for skilled labour to mach the observed
increase in supply. We provide econometric evidence in support of this hypothesis, showing that skill shortages
are higher for establishments that use advanced technology in the production process. We also provide
econometric evidence that hiring difficulties are inversely related to the relative wage, as theory would suggest.
Our results have clear implications for policy. If technological progress continues to be skill biased, policies that
address skills deficiencies will only be successful if they produce a continual, rather than a temporary, increase in
levels of skills among the workforc