Skill: An Elusive and Ambiguous Concept in Labour Market Studies

Abstract

The concept of skill and its measurement has been central in contemporary discussions of labour market issues. Such issues as the rise in earnings inequality and changes to the skill composition of employment have served to highlight the limitations of definitions of skill and the problems that these pose for analysis of labour market changes. This paper argues that current measures of skill contain numerous limitations and ambiguities. Part of the reason is that the concept is complex and ill defined. This paper suggests that a more robust and detailed definition of skill is imperative. Furthermore, definitions and measures of skill used in the Occupational Information Network (O*NET) provide an advanced and more useful background for skill measurement and analysis than current measures. Such an approach would be beneficial to adopt in Australia, as it would provide a broader, more accurate and detailed understanding of the nature of occupations, issues related to skill and skill shortages, and labour market change.