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The Productivity Impact of Skills in English Manufacturing, 2001: Evidence from Plant-Level Matched Data

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Abstract

Microeconomic analyses of productivity for the UK have generally not been able to control for the quality of the labour input, primarily due to data availability, and yet the supply of suitably skilled labour is thought to be a major contributing factor to productivity levels. This paper combines the Annual Respondents Database with the Employers’ Skills Survey for 2001, which allows for a more detailed analysis of the role of skills in determining plant level productivity. Using an augmented Cobb-Douglas production function, the analysis shows that plants experiencing skills shortages were generally less productive than those who did not perceive a skills gap, having controlled for industry and regional effects. In more detail, the analysis reveals some interesting results: the impact that skills gaps have on productivity vary by industry, and higher qualifications do not always result in higher productivity, although innovative plants are seen to be on average 5 per cent more productive, as a result of their more qualified workforce.

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  • R Harris & Q Li & C Robinson, "undated". "The Productivity Impact of Skills in English Manufacturing, 2001: Evidence from Plant-Level Matched Data," Working Papers 2006_16, Business School - Economics, University of Glasgow.
  • Handle: RePEc:gla:glaewp:2006_16
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    1. Lindbeck, Assar & Snower, Dennis J, 1996. "Reorganization of Firms and Labor-Market Inequality," American Economic Review, American Economic Association, vol. 86(2), pages 315-321, May.
    2. Piva, Mariacristina & Santarelli, Enrico & Vivarelli, Marco, 2005. "The skill bias effect of technological and organisational change: Evidence and policy implications," Research Policy, Elsevier, vol. 34(2), pages 141-157, March.
    3. Mark Doms & Timothy Dunne & Kenneth R. Troske, 1997. "Workers, Wages, and Technology," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 253-290.
    4. O'Mahony, Mary & Robinson, Catherine & Vecchi, Michela, 2008. "The impact of ICT on the demand for skilled labour: A cross-country comparison," Labour Economics, Elsevier, vol. 15(6), pages 1435-1450, December.
    5. Galindo-Rueda, Fernando & Haskel, Jonathan, 2005. "Skills, Workforce Characteristics and Firm-Level Productivity: Evidence from the Matched ABI/Employer Skills Survey," IZA Discussion Papers 1542, Institute of Labor Economics (IZA).
    6. Nathalie Greenan, 2003. "Organisational change, technology, employment and skills: an empirical study of French manufacturing," Cambridge Journal of Economics, Oxford University Press, vol. 27(2), pages 287-316, March.
    7. Donald Siegel, 1998. "The Impact Of Technological Change On Employment: Evidence From A Firm-Level Survey Of Long Island Manufacturers," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 5(2-4), pages 227-246.
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