The human side of productivity
Uncovering the role of skills and diversity for firm productivity
Relying on linked employer-employee datasets from 10 countries, this paper documents
that the skills and the diversity of the workforce and of managers – the human side
of businesses – account on average for about one third of the labour productivity
gap between firms at the productivity “frontier” (the top 10% within each detailed
industry) and medium performers at the 40-60 percentile of the productivity distribution.
The composition of skills, especially the share of high skills, varies the most along
the productivity distribution, but low and medium skilled employees make up a substantial
share of the workforce even at the frontier.
High skills show positive but decreasing productivity returns. Moreover, the skill
mix of top firms varies markedly across countries, pointing to the role of different
strategies pursued by firms in different policy environments. We also find that managerial
skills play a particularly important role, also through complementarities with worker
skills. Gender and cultural diversity among managers – and to a lesser extent, among
workers – is positively related to firm productivity as well. We discuss public policies
that can facilitate the catch-up of firms below the frontier through skills and diversity.
These cover a wide range of areas, exerting their influence through three main channels:
the supply, upgrading and the matching across firms (the SUM) of skills and other
Published on December 06, 2021
In series:OECD Productivity Working Papersview more titles