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This report was prepared by the Institute for Market Economics (IME) and is dedicated to the study of skills mismatches in the EU and their effect on the competitiveness of EU businesses. It includes a comprehensive review of existing literature on the issue and outlines some of the main conclusions regarding the relation of skill mismatches to education, personal and aggregate productivity, labour market dynamics and outcomes, innovation capacity and competitiveness. The study also includes the results of a dedicated survey designed to shed further light on the causes and effects of skills mismatches from the point of view of companies. We provide further evidence of the importance of Mismatch Priority Occupations (as identified by Cedefop), as well as additional insight into potential labour market bottleneck in five reference countries (Austria, Bulgaria, Finland, Germany and Spain).