Skills, Workforce Characteristics and Productivity in England

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Skills, Workforce Characteristics and
Productivity in England

• Fernando Galindo-Rueda (DTI, CEP, CeRiBA)
• Jonathan Haskel (QMUL, CEPR, CeRiBA)

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Some questions

• From societys viewpoint.
• What is the return to investing in skills?
• Do wages tell the full story?
• How do workforce characteristics affect
  productivity? e.g. gender
• Are observed wages justified by productivity
  differentials?
• ? Importance of direct estimates of
  productivity impacts

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Method comparing returns implied by productivity
and wages
Production function
Input n Quality/efficiency units of labour
Estimation of production function (estimate
relative wage implied by productivity)
jointly with wage bill equation (estimate
relative wages)
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Data

• UK Firm-level productivity literature does not
  include skills information.
• Sources ARD, Companies House data.
• Data linking becomes necessary
• the Employers Skill Survey
• Linking not without faults
• different sampling bases
• multi-establishment firms

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Data linking Estimation sample
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Employer Skills Survey (ESS)

• Survey of English establishments. Data on skills,
  skill shortages, etc
• We use of workers at firm with different
  attainment level None,1,2,3,4
• Derived from information on
• Occupational shares in firm
• Predominant qualification in occupation, in firm

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Frequency of firms shares of workers educated to
level 3 and above, by sector.
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Descriptive statistics
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Comparison of returns implied by production and
wage bill regressions
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Implied and observed returns Differences
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Profitability regression manufacturing
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Profitability regression services
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Quality of labour in production regressions
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Productivity and wages Link to share of
graduates in local area
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Conclusions

• -Produced dataset with linked workforce skills
  and performance measures.
• -Qualifications significant. Gender and PT
  effects.
• -Implemented two types of test for
  competitiveness in labour markets 1. Differences
  in implied returns. 2. Impacts on
  profitability.
• -Few robust, significant differences in implied
  returns. Sector variability. Part-timers only
  exception. Explains part of gender effects.
• -PT increases profitability in manufacturing,
  opposite in services.
• -Surrounding skills associated with higher
  productivity more than with wages