Adjusting to skill shortages in Australian SMEs

Joshua Healy, Konstantinos Mavromaras, Peter Sloane

Research output: Contribution to journalArticlepeer-review

34 Citations (Scopus)


Skill shortages are often portrayed as a major problem for advanced economies, yet there is surprisingly little empirical evidence about how firms adjust to skill shortages and their associated effects on firm performance. This article provides new evidence from the Business Longitudinal Database, an Australian data set with unusually rich information on the causes and consequences of skill shortages in small- and medium-sized enterprises. We document the range of alternative strategies that firms adopt when responding to skill shortages and show that certain types of adaptation are used in some cases and not in others, depending on the type of shortage encountered and other attributes of the firm. Further, we show that certain types of skill shortage are more likely to be long-lasting and difficult to resolve, while others are alleviated relatively quickly with minimal adjustment. Our findings yield lessons for the skill utilization strategies of firms and for the labour market policies of governments.

Original languageEnglish
Pages (from-to)2470-2487
Number of pages18
JournalApplied Economics
Issue number24
Early online date2015
Publication statusPublished - 21 May 2015


  • firm performance
  • labour demand
  • skill shortages
  • SMEs


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