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The innovation premium to soft skills in low-skilled occupations

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  • Philippe Aghion
  • Antonin Bergeaud
  • Richard Blundell
  • Rachel Griffith

Abstract

Matched employee-employer data from the UK are used to analyze the wage premium to working in an innovative firm. We find that firms that are more R&D intensive pay higher wages on average, and this is particularly true for workers in some low-skilled occupations. We propose a model in which a firm's innovativeness is reflected in the degree of complementarity between workers in low-skill and high-skilled occupations, and in which non-verifiable soft skills are an important determinant of the wages of workers in low-skilled occupations. The model yields additional predictions on training, tenure and outsourcing which we also find support for in data.

Suggested Citation

  • Philippe Aghion & Antonin Bergeaud & Richard Blundell & Rachel Griffith, 2019. "The innovation premium to soft skills in low-skilled occupations," CEP Discussion Papers dp1665, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp1665
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    Keywords

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    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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