Information Problem in Labour Market and Big Data: Colombian Case

This working paper discusses the concepts and theoretical framework to analyse the labour market, based on the information found on online job portals. Based on a model with imperfect information (which seems more appropriate to describe Colombian labour market outcomes), the first section explains how skill mismatches can arise and their consequences for informality and unemployment rates. In second section, presents evidence that skill shortages, unemployment and informality are highly occurring phenomena in Colombia; and, it is argued that workers, educational and training providers and the government can do little to address these issues because of a lack of proper information to monitor and identify employers’ requirements and possible skill shortages at an occupational level. In section 3 the concept of Big Data is introduced, with its advantages and limitations outlined for labour market analysis, this section explains the limitations and caveats to be considered when online vacancy data are used for economic analysis.