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The Value of Skills

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  • Francis Green

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Abstract

Many commentators have argued that "key skills" are becoming more important in modern workplaces. This paper draws on a survey that uses a methodology based on job analysis to measure skills at work, and estimates their implicit prices using a hedonic wage equation. The main new findings are that: (a) Computer skills are highly valued in the current British labour market. Even at "moderate" levels of complexity, for example using word-processing packages, workers using computers earn an average premium (after controlling for other job skills) in excess of 20 per cent, compared to those who do not use computers at all. (b) Professional communication and problem-solving skills are also highly valued. A one-standard-deviation increase in either type of skill raises pay by around 5 per cent, after allowing for all the controls. To a lesser extent, verbal skills also carry a pay premium for women. But planning, and client and horizontal communication skills, have little independent association with pay. Numerical skills also have no conditional link with pay, other than through being associated with more complex computer usage. (c) Jobs involving task variety earn more pay, but there is no strong evidence that greater autonomy is positively rewarded. (d) Participating in Quality Circles and, more tentatively, in organised work teams attracts a pay premium. (e) Jobs which require a long learning time, which deploy transferable skills, and/or for which there are higher qualifications requirements command a higher pay. (f) A reasonably complete job analysis provides a useful means of accounting for a wage distribution via a hedonic wage equation.

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File URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/9819.pdf
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Bibliographic Info

Paper provided by Department of Economics, University of Kent in its series Studies in Economics with number 9819.

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Date of creation: Oct 1998
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Handle: RePEc:ukc:ukcedp:9819

Contact details of provider:
Postal: Department of Economics, University of Kent at Canterbury, Canterbury, Kent, CT2 7NP
Phone: +44 (0)1227 764000
Fax: +44 (0)1227 827850
Web page: http://www.ukc.ac.uk/economics/

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Related research

Keywords: Skills; Wages; Computers;

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References

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  1. DiNardo, John E & Pischke, Jorn-Steffen, 1997. "The Returns to Computer Use Revisited: Have Pencils Changed the Wage Structure Too?," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 291-303, February.
  2. Richard J. Murnane & John B. Willett & Frank Levy, 1995. "The Growing Importance of Cognitive Skills in Wage Determination," NBER Working Papers 5076, National Bureau of Economic Research, Inc.
  3. Machin, S. & Van Reenen, J., 1997. "Technology and Changes in Skill Structure: Evidence from Seven OECD Countries," Papers 24, Centre for Economic Performance & Institute of Economics.
  4. Machin, Steve, 1994. "Changes in the Relative Demand for Skills in the UK Labour Market," CEPR Discussion Papers 952, C.E.P.R. Discussion Papers.
  5. Francis Green & Scott M. Montgomery, 1998. "The Quality of Skill Acquisition in Young Workers' First Job," LABOUR, CEIS, vol. 12(3), pages 473-487, 09.
  6. Entorf, Horst & Kramarz, Francis, 1997. "Does unmeasured ability explain the higher wages of new technology workers?," European Economic Review, Elsevier, vol. 41(8), pages 1489-1509, August.
  7. Kevin T. Reilly, 1995. "Human Capital and Information: The Employer Size-Wage Effect," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 1-18.
  8. P. J. Sloane & H. Battu & P. T. Seaman, 1999. "Overeducation, undereducation and the British labour market," Applied Economics, Taylor & Francis Journals, vol. 31(11), pages 1437-1453.
  9. McNabb, Robert, 1989. "Compensating Wage Differentials: Some Evidence for Britain," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 327-38, April.
  10. Katz, Eliakim & Ziderman, Adrian, 1990. "Investment in General Training: The Role of Information and Labour Mobility," Economic Journal, Royal Economic Society, vol. 100(403), pages 1147-58, December.
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Citations

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Cited by:
  1. Brice Corgnet & Ismael Rodriguez Lara, 2009. "Are you a good employee or simply a good guy? Influence Costs and Contract Design," Faculty Working Papers 13/09, School of Economics and Business Administration, University of Navarra.
  2. Heijke,Hans & Meng,Christoph & Ramaekers,Ger, 2003. "An investigation into the role of human capital competences and their pay-off," ROA Research Memorandum 001, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  3. Fatima Suleman & Jean-Jacques Paul, 2008. "Diversity of human capital attributes and diversity of remunerating systems," Post-Print halshs-00260115, HAL.
  4. Francis Green & Alan Felstead & Duncan Gallie, 2003. "Computers and the changing skill-intensity of jobs," Applied Economics, Taylor & Francis Journals, vol. 35(14), pages 1561-1576.
  5. Fatima Suleman & Jean-Jacques Paul, 2007. "Diversity of human capital attributes and diversity of remunerations," Post-Print halshs-00181402, HAL.
  6. Heijke Hans & Meng Christoph, 2007. "Discipline-specific and academic competencies of the higher educated: their value in the labour market and their acquisition in education," ROA Working Paper 001, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  7. Francis Green & Donna James, 2001. "Do Male Bosses Underestimate their Female Subordinates' Skills? A Comparison of Employees' and Line Managers' Perceptions of Job Skills," Studies in Economics 0107, Department of Economics, University of Kent.
  8. Loo,J.,van & Semeijn,J., 2001. "Measuring Competences in School-leaver Surveys," ROA Research Memorandum 002, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  9. Ganna Vakhitova & Christopher R. Bollinger, 2011. "Labor Market Return to Computer Skills: Using Microsoft Certification to Measure Computer Skills," Discussion Papers 46, Kyiv School of Economics.
  10. Sakellariou, Chris N. & Patrinos, Harry A., 2003. "Technology, computers, and wages : evidence from a developing economy," Policy Research Working Paper Series 3008, The World Bank.
  11. L Feinstein, 2000. "The Relative Economic Importance of Academic, Psychological and Behavioural Attributes Developed on Chilhood," CEP Discussion Papers dp0443, Centre for Economic Performance, LSE.

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