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Productivity and the Allocation of Skills

Author

Listed:
  • David C Maré

    (Motu Economic and Public Policy Research)

  • Trinh Le

    (Motu Economic and Public Policy Research)

  • Richard Fabling

    (Independent Researcher)

  • Nathan Chappell

    (Motu Economic and Public Policy Research)

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.

Suggested Citation

  • David C Maré & Trinh Le & Richard Fabling & Nathan Chappell, 2017. "Productivity and the Allocation of Skills," Working Papers 17_04, Motu Economic and Public Policy Research.
    • Handle: RePEc:mtu:wpaper:17_04
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    References listed on IDEAS

    as
    1. David C Mare & Lynda Sanderson & Richard Fabling, 2014. "Earnings and Employment in Foreign-owned Firms," Treasury Working Paper Series 14/16, New Zealand Treasury.
    2. Peter Nijkamp & Jacques Poot & Jessie Bakens (ed.), 2015. "The Economics of Cultural Diversity," Books, Edward Elgar Publishing, number 15883.
    3. Giovanni Peri & Kevin Shih & Chad Sparber, 2016. "STEM Workers, H-1B Visas, and Productivity in US Cities," World Scientific Book Chapters, in: The Economics of International Migration, chapter 9, pages 277-307, World Scientific Publishing Co. Pte. Ltd..
    4. Walker, Ian & Zhu, Yu, 2011. "Differences by degree: Evidence of the net financial rates of return to undergraduate study for England and Wales," Economics of Education Review, Elsevier, vol. 30(6), pages 1177-1186.
    5. Hellerstein, Judith K & Neumark, David & Troske, Kenneth R, 1999. "Wages, Productivity, and Worker Characteristics: Evidence from Plant-Level Production Functions and Wage Equations," Journal of Labor Economics, University of Chicago Press, vol. 17(3), pages 409-446, July.
    6. Richard Fabling & Lynda Sanderson, 2016. "A Rough Guide to New Zealand's Longitudinal Business Database (2nd edition)," Working Papers 16_03, Motu Economic and Public Policy Research.
    7. David C. Maré & Dean R. Hyslop & Richard Fabling, 2017. "Firm productivity growth and skill," New Zealand Economic Papers, Taylor & Francis Journals, vol. 51(3), pages 302-326, September.
    8. Richard Fabling & David C Maré, 2015. "Addressing the absence of hours information in linked employer-employee data," Working Papers 15_17, Motu Economic and Public Policy Research.
    9. Judith K. Hellerstein & David Neumark, 1995. "Are Earnings Profiles Steeper Than Productivity Profiles? Evidence from Israeli Firm-Level Data," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 89-112.
    10. Richard Fabling, 2009. "A Rough Guide to New Zealand's Longitudinal Business Database," Global COE Hi-Stat Discussion Paper Series gd09-103, Institute of Economic Research, Hitotsubashi University.
    11. Robert H. Topel & Michael P. Ward, 1992. "Job Mobility and the Careers of Young Men," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 439-479.
    12. David C. Maré & Yun Liang, 2006. "Labour Market Outcomes for Young Graduates," Working Papers 06_06, Motu Economic and Public Policy Research.
    13. Peri, Giovanni & Shih, Kevin Y., 2013. "Foreign Scientists and Engineers and Economic Growth in Canadian Labor Markets," IZA Discussion Papers 7367, Institute of Labor Economics (IZA).
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    Cited by:

    1. Santiago, I. & Trillo-Montero, D. & Moreno-Garcia, I.M. & Pallarés-López, V. & Luna-Rodríguez, J.J., 2018. "Modeling of photovoltaic cell temperature losses: A review and a practice case in South Spain," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 70-89.
    2. Shiri M. Breznitz & Qiantao Zhang, 0. "Determinants of graduates’ entrepreneurial activity," Small Business Economics, Springer, vol. 0, pages 1-18.
    3. Ringkjøb, Hans-Kristian & Haugan, Peter M. & Solbrekke, Ida Marie, 2018. "A review of modelling tools for energy and electricity systems with large shares of variable renewables," Renewable and Sustainable Energy Reviews, Elsevier, vol. 96(C), pages 440-459.

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    More about this item

    Keywords

    Firm productivity; linked employer-employee data; skill matching; STEM;
    All these keywords.

    JEL classification:

    • D29 - Microeconomics - - Production and Organizations - - - Other
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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