Skill complementarity in production technology: New empirical evidence and implications

Andrey Stoyanov and Nick Zubanov

German Economic Review, 2022, vol. 23, issue 2, 233-274

Abstract: Danish manufacturing firm data reveal that 1) industries differ in within-firm worker skill (= wage) dispersion, and 2) within-firm skill dispersion positively correlates with firm productivity in industries with higher average skill dispersion. We argue that these patterns reflect technological differences between industries: firms in the “skill complementarity” industries profit from hiring similarly able workers, while the “skill substitutability” firms thrive on skill differences. Our study produces a robust, data-driven and theoretically validated classification of industries into the complementarity and substitutability groups, unveils hitherto unnoticed technological heterogeneity between industries within the same economy, and illustrates its importance through simulations.

Keywords: skill dispersion; complementarity; production technology; firm productivity (search for similar items in EconPapers)
Date: 2022
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Working Paper: Skill Complementarity in Production Technology: New Empirical Evidence and Implications (2019)
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DOI: 10.1515/ger-2020-0102

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