Reverse Educational Spillovers at the Firm Level

Purpose: The purpose of this paper is to examine spillover effects across differently educated workers. For the first time, we consider "reverse" spillover effects, i.e. spillover effects from secondary-educated workers with dual vocational education and training (VET) to tertiary-educated workers with academic education. We argue that, due to structural differences in training methodology and content, secondary-educated workers with VET degrees have knowledge that tertiary academically educated workers do not have. Design/methodology/approach: We use data from a large employer-employee data set: the Swiss earnings structure survey. We estimate OLS and fixed effects panel-data models to identify such "reverse" spillover effects. Moreover we consider the endogenous workforce composition. Findings: We find that tertiary-educated workers have higher productivity when working together with secondary-educated workers with VET degrees. Our instrumental variable estimations support this finding. The functional form of the reverse spillover effect is inverted-U-shaped. This means that at first the reverse spillover effect from an additional secondary-educated worker is positive but diminishing. Research limitations/implications: Our results imply that firms need to combine different types of workers because their different kinds of knowledge produce spillover effects and thereby lead to overall higher productivity. Originality/value: The traditional view of spillover effects assumes that tertiary-educated workers create spillover effects towards secondary-educated workers. However, we show that workers who differ in their type of education (academic vs. vocational) may also create reverse spillover effects.