Predicting Skill Shortages in Labor Markets: A Machine Learning Approach
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2004.01311v3.pdf | Accepted version | 605.62 kB |
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Skill shortages are a drain on society. They hamper economic opportunities
for individuals, slow growth for firms, and impede labor productivity in
aggregate. Therefore, the ability to understand and predict skill shortages in
advance is critical for policy-makers and educators to help alleviate their
adverse effects. This research implements a high-performing Machine Learning
approach to predict occupational skill shortages. In addition, we demonstrate
methods to analyze the underlying skill demands of occupations in shortage and
the most important features for predicting skill shortages. For this work, we
compile a unique dataset of both Labor Demand and Labor Supply occupational
data in Australia from 2012 to 2018. This includes data from 7.7 million job
advertisements (ads) and 20 official labor force measures. We use these data as
explanatory variables and leverage the XGBoost classifier to predict yearly
skills shortage classifications for 132 standardized occupations. The models we
construct achieve macro-F1 average performance scores of up to 83 per cent. Our
results show that job ads data and employment statistics were the highest
performing feature sets for predicting year-to-year skills shortage changes for
occupations. We also find that features such as 'Hours Worked', years of
'Education', years of 'Experience', and median 'Salary' are highly important
features for predicting occupational skill shortages. This research provides a
robust data-driven approach for predicting and analyzing skill shortages, which
can assist policy-makers, educators, and businesses to prepare for the future
of work.
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