Productivity and the Allocation of Skills

Motu Working Paper No. 17-04

45 Pages Posted: 15 Apr 2017

See all articles by David C. Maré

David C. Maré

Motu Economic and Public Policy Research Trust; University of Waikato - Economics

Trinh Le

Motu Economic and Public Policy Research Trust

Richard Fabling

Motu Economic and Public Policy Research Trust

Nathan Chappell

Motu Economic and Public Policy Research Trust

Date Written: April 12, 2017

Abstract

We use linked employer-employee data from 2004–2012, combined with individual qualifications data from 1994–2012, to study how graduates with different skills fare in the labour market in the six years after studying. We find that graduates experience improvements in earnings, and that they systematically move between jobs, industries and locations in a pattern that is consistent with their securing better job matches, particularly for high level STEM graduates. We then estimate joint production function and wage equations to see how the skill composition of a firm’s employees correlates with productivity, and compare this with how the skill composition correlates with its wage bill. Our results suggest that degree graduates make a growing positive contribution to production in the six years after graduation, with associated wage growth. There is variation in relative productivity and wages across groups of graduates that differ by field of study and level of qualification.

Keywords: Firm Productivity, Linked Employer-Employee Data, Skill Matching, STEM

JEL Classification: D29, J24

Suggested Citation

Maré, David C. and Le, Trinh and Fabling, Richard Blaikie and Chappell, Nathan, Productivity and the Allocation of Skills (April 12, 2017). Motu Working Paper No. 17-04, Available at SSRN: https://ssrn.com/abstract=2952113 or http://dx.doi.org/10.2139/ssrn.2952113

David C. Maré (Contact Author)

Motu Economic and Public Policy Research Trust ( email )

PO Box 24390
Wellington, 6021
New Zealand
64-4-9394250 (Phone)

HOME PAGE: http://www.motu.org.nz

University of Waikato - Economics

New Zealand

Trinh Le

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

Richard Blaikie Fabling

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

Nathan Chappell

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

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