Relationship Between Skill, Technology and Input–Output Indicators

This chapter uses the data from the Firm Survey (2002, Technological change and skill development: A comparative study of chemical and metal medium and large scale enterprises in the UAE. April, 2002) to examine skill indicators, their implications and relationships with average wages, and with upskilling (ICT training) and technology (ICT), ICT and input–output indicators at the micro/firm level. The findings illustrate the low skill levels –due to the excessive share of unskilled foreign workers– and the implications on skills mismatch, public-private duality and productivity decline across private firms. These findings verify our hypotheses regarding the implications of the interaction between the deficient educational system and high use of unskilled foreign workers. These findings then confirm our first hypothesis, concerning the pressing need for upskilling, particularly within the private sector. The results show positive correlations between actual and required education, experience and average wages. These results verify part of the fourth hypothesis that an increase in skill level and firm size lead to improved relationships between actual and required education, and between actual education, experience and wages. The findings with respect to the positive complementary relationships between skill, technology (ICT) and upskilling (ICT training) and between computers, telecommunications and ICT training are consistent with the findings in the new growth literature. We illustrate and corroborate part of the fourth hypothesis that an increase in skill level and firm size lead to an improvement in the complementary relationships between skill, upskilling and technology (ICT). Taken together, all these results imply the importance of a good education for bridging differences between firms and also for enhancing skill, technology and upskilling complementarity at the micro level. These findings seem consistent with the endogenous growth framework and stylized facts concerning the relationships between human capital, technical progress and upskilling and our theoretical framework. In addition, our results verify part of the fourth hypothesis concerning the relationships between actual and required education and experience and between actual education, experience and wages and the relationships between technology (ICT), skill and upskilling (ICT training). The results corroborate the fifth hypothesis regarding the inconclusive effect of ICT at the micro level.