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Firm productivity growth and skill

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  • David C. Maré
  • Dean R. Hyslop
  • Richard Fabling

Abstract

This paper examines firm multifactor productivity (mfp) growth and changing skill levels of labour in New Zealand, using NZ microdata for 2001–2012. Strong employment growth for lower skilled workers lowered average skill by 1.8% over the period, with declining unobserved skill (−3.6%) outweighing increasing observed skill (1.8%). Consequently, skill-adjusted mfp growth (0.24% pa) was higher than unadjusted growth (0.14% pa). The impact of skill adjustment was almost entirely due to changing skill composition within continuing firms. Skill dilution was strongest pre-global financial crisis (GFC), and was reversed when employment contracted in 2009 and 2010. Adjusting for skill dilution reveals stronger procyclical variation in mfp.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:nzecpp:v:51:y:2017:i:3:p:302-326
    DOI: 10.1080/00779954.2016.1203815
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    Cited by:

    1. Richard Fabling & David C. Maré, 2016. "Firm-Level Hiring Difficulties: Persistence, Business Cycle And Local Labour Market Influences," Journal of Labor Research, Springer, vol. 37(2), pages 179-210, June.
    2. Paul Conway, 2018. "Can the Kiwi Fly? Achieving Productivity Lift-off in New Zealand," International Productivity Monitor, Centre for the Study of Living Standards, vol. 34, pages 40-63, Spring.
    3. Mare, David C., 2016. "Urban productivity estimation with heterogeneous prices and labour," Motu Working Papers 290558, Motu Economic and Public Policy Research.
    4. Anneleen Vandeplas & Anna Thum-Thysen, 2019. "Skills Mismatch and Productivity in the EU," European Economy - Discussion Papers 100, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    5. Mare, David C. & Le, Trinh & Fabling, Richard & Chappell, Nathan, 2017. "Productivity and the allocation of skills," Motu Working Papers 290522, Motu Economic and Public Policy Research.
    6. Fabling Richard, 2024. "Still medalling: Productivity gets a bronze (data source)," Motu Working Papers 24_06, Motu Economic and Public Policy Research.
    7. Adam Jaffe & Nathan Chappell, 2018. "Worker flows, entry, and productivity in New Zealand's construction industry," Motu Working Papers 18_02, Motu Economic and Public Policy Research.
    8. Rho, Yeirae & Fabrizi, Simona & Lippert, Steffen, 2021. "Employee characteristics, absorptive capacity and innovation," MPRA Paper 106407, University Library of Munich, Germany, revised 04 Mar 2021.
    9. Richard Fabling & David Maré, 2024. "Pay in Māori-led firms," Motu Working Papers 24_05, Motu Economic and Public Policy Research.
    10. Isabelle Sin & Steven Stillman & Richard Fabling, 2017. "What drives the gender wage gap? Examining the roles of sorting, productivity differences, and discrimination," Motu Working Papers 17_15, Motu Economic and Public Policy Research.
    11. Richard Fabling & David C Maré & Philip Stevens, 2022. "Migration and firm-level productivity," Working Papers 2022/01, New Zealand Productivity Commission.
    12. Guanyu Zheng, 2016. "Geographic proximity and productivity convergence across New Zealand firms," Working Papers 2016/04, New Zealand Productivity Commission.
    13. Fabling, Richard & Mare, David C., 2019. "Improved productivity measurement in New Zealand's Longitudinal Business Database," Motu Working Papers 290393, Motu Economic and Public Policy Research.
    14. Fabling, Richard & Mare, David C, 2015. "Addressing the absence of hours information in linked employer-employee data," Motu Working Papers 290583, Motu Economic and Public Policy Research.
    15. Fabling, Richard, 2018. "Entrepreneurial beginnings: Transitions to selfemployment and the creation of jobs," Motu Working Papers 290499, Motu Economic and Public Policy Research.
    16. Lynda Sanderson, 2024. "Born in bad times: Economic conditions, selection and employment," Working Papers 2024/01, New Zealand Productivity Commission.
    17. Sin, Isabelle & Fabling, Richard & Jaffe, Adam B, & Mare, David C. & Sanderson, Lynda, 2014. "Exporting, Innovation and the Role of Immigrants," Motu Working Papers 290599, Motu Economic and Public Policy Research.
    18. Richard Fabling, 2021. "Living on the edge: An anatomy of New Zealand's most productive firms," Motu Working Papers 21_01, Motu Economic and Public Policy Research.

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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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