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Forecasting skills supply and demand – Cedefop
modelling approach
Rob Wilson
Institute for Employment Research
University of Warwick
Session 1: Forecasting skills supply and demand in Europe - Cedefop modelling approach -Expert seminar on Methodology and new ideas: Thessaloniki, 3rd October 2013
Overview
Purpose of the projections
Overall approach
Role of the E3ME multi-sectoral macroeconomic model
Modelling the supply of and demand for skills
Key issues to be addressed
Purpose of the projections
To provide a comprehensive and consistent overview of anticipated skill demand and supplies across Europe using common data and models taking account of key drivers such as climate change,
globalisation, technological change and demographic developments
To inform strategic thinking and policy-design to respond successfully to challenges and opportunities
Modelling framework
Module 1: Multi-sectoral macroeconomic model (E3ME)
Employment (labour demand)
Labour market participation rates
Benefit rates
Economic activity
Active labour force by age and gender
Working age population by age and gender (exogenous)
Unemployment
Wage rates
Job openings
by Occupation
(ISCO 2 digit)
Job openings by Qualification
(ISCED category)
Module 2: Employment levels and Expansion
Demand by occupation (EDMOD)
Module 3: Employment levels
and Expansion Demand by qualification (QUALMOD)
Module 4: Replacement demand by occupation / qualification (RDMOD)
Module 6: Stocks & Flow numbers by ISCED category
(STOCKFLOWMOD)
Numbers in the population by ISCED
category
Module 5: Stocks of people by
qualifications, 3 ISCED levels & by economic status (STOCKMOD)
Module 7: Imbalances (Supply-Demand), 3 ISCED
levels (BALMOD)
Numbers in the labour force by ISCED category
Supply of skills Demand for skills
Module 8: Occupational Skills Profiles (OSPs)
Role of the E3ME multi-sectoral macroeconomic model
Model the links between the labour market and the wider economy
Provide a consistent modelling framework for projecting skills demand and supply together allows analysis of imbalances (unemployment)
Take key drivers into account e.g. the impacts of the financial crisis and demographic change
Include analyses of key uncertainties develop alternative scenarios to see how these will impact on skills
in the future
Key strengths of E3ME
Integration of the economy, energy systems and environment, and the labour market
Detailed sectoral disaggregation and linkages (69 NACE sectors and full input-output table)
Geographical coverage and linkages (EU28+3) linked through international trade equations
Econometric specification with estimated equations for: labour demand; supply; wages; and working hours
Test
The labour market: endogenous links within E3ME
Economic activity
Participation rates
Labour supply Unemployment Wage rates
Employment
Hours worked Population
Modelling economy inter-linkages
economic activity
exports
total demand
employment
public consumption
household expenditure
incomes
imports
output
other countries' exports
Region
investment &
production inputs
includes innovation effects
Rest of the World
includes price/wage effects
Rest of the EU
economic activity
Modelling the supply of and demand for skills Use of the LFS to measure skills (occupations and
qualifications)
Separate supply, demand and imbalances modules
Demand – occupational and qualification patterns within industries
Supply – stock flow models of qualification attainments
Imbalances and mismatches – reconciling demand with available supply
Key issues to be addressed – the move to ISCO08 for classifying Occupations Information only available for one year (2011)
severely limits what can be done
Combination of this with previous time series and projection methods using heroic assumptions
New data in 2014 and beyond will gradual enable refinement of the approach
Summary
E3ME is to model the links between the labour market and the wider economy
LFS data to model skills as measured by occupation and qualification
Consistent modular framework for projecting skills demand and supply together
Dealing with the shift to ISCO08 in a pragmatic and transparent fashion
Professor Rob Wilson, Warwick institute for Employment Research
Email: [email protected]
www.warwick.ac.uk/ier
Further information