The impact of educational mismatch on returns to R&D: evidence from manufacturing in OECD countries

Ioana A. Igna and Francesco Venturini ()

Economics of Innovation and New Technology, 2019, vol. 28, issue 5, 435-464

Abstract: This paper investigates the effect of educational mismatch of R&D workers on firm's returns to innovation. R&D labour mismatch emerges when R&D workers have competencies different from those required by their occupation providing a contribution to innovation lower than in the case of perfect educational matching. By estimating a knowledge production function on data for 13 manufacturing industries from 16 OECD countries between 2003 and 2011, we find that R&D labour mismatch may cause returns to R&D investment to be between 10 and 15% lower than estimated in the literature. These results are robust to controlling for institutional factors, simultaneity feedbacks and other mis-specification issues. The detrimental effect of the misallocation of R&D labour is found to be stronger in those sectors where R&D activities have greater potential (returns), i.e. high-tech sectors.

Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:taf:ecinnt:v:28:y:2019:i:5:p:435-464

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DOI: 10.1080/10438599.2018.1527548

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