Skills and economic policy choices

It is well known that low labour force skills are associated with a low employment rate, a high structural unemployment rate, a low level of corporate modernisatio n and deindustrialisation . This is probably due to the fact that low-skilled employees have low employability and have difficult y in using sophisticated equipment . But do labour force skills also have an impact on the economy’s situation through the economic policy choices that are made and which, in a democracy, to a large extent is a result of the preferences of the labour force? By comparing OECD countries, we seek to determine whether there is a link between labour force skills and: Level of public spending, and social welfare in particular; Level of the tax burden, especially companies’ social contributions and taxes on capital; Level of the fiscal deficit and public debt; Changes in cost competitiveness; Working time; Retirement age. We see a significant correlation between labour force skills and: Companies’ social contributions (high when skills are low); The fiscal deficit (high when skills are low); The employment rate of 60- to 64-year olds (low retirement age when skills are low). Skills also have an impact on economic policy choices.