ID Lab ONLINE Workshop

Nick Zubanov presented the results of the study "Skill complementarity in production technology: new empirical evidence and implications", conducted jointly with Andrey Stoyanov

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. The authors 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. This 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.