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Skill Composition: Exploring a Wage-based Skill Measure

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Most studies of heterogeneous labor inputs use classifications of high skilled and low skilled based on workers' educational attainment. In this study we explore a wage-based skill measure using information from a wage equation. Evidence from matched employer--employee data show that skill is attributable to many variables other than educational length, for instance experience and type of education. Applying our wage-based skill measure to a TFP growth analysis, we find that the TFP residual decreases, indicating that more of the change in value-added is picked up by our skill measure than when using a purely education-based measure of skill

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  • Øivind A. Nilsen & Arvid Raknerud & Marina Rybalka & Terje Skjerpen, 2008. "Skill Composition: Exploring a Wage-based Skill Measure," Discussion Papers 531, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:531
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    References listed on IDEAS

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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