Labour Productivity and Skills

Lead Research Organisation: Lancaster University
Department Name: Economics

Abstract

Labour productivity is 0/L, where Q is output and L is the labour input - an input that has both a quantity dimension (man hours) and a quality dimension (skills). Human capital contributes to the skills of workers and is widely recognised to be the primary driver of Lin developed countries. This is reflected in labour productivity, and thence real wages. It is a widely-held view that Britain needs to increase the skills of the workforce, and ensure that they are better matched to employers' needs, to address the "skills gap". While the dominant proxy for productivity in the literature remains (hourly) earnings (i.e. the wage rate), reflecting the tendency for labour markets to better reward those with greater skills, there are good reasons for thinking this is a naive measure - an issue which will be explored in the planned research.
Early research on the aggregate impact of education on GNP failed to reflect the findings in individual level studies - that showed large causal effect on wages, this is now attributed to measurement error in the aggregate data on education. In particular, subsequent research in [4] showed that correcting for measurement error bias results in aggregate data leads to effects on per capita GNP that exceed the individual level effects of education. Many countries have sought to increase their average living standards through the expansion of higher education. In the spirit of skills being the most important long-term driver of labour productivity, we aim to analyse the effects of higher education on wages. An excellent recent overview of the skills and productivity literature in Economics can be found in [3] and the role of skills in heavily emphasised in OECD's recent "forward look" in [5].

Publications

10 25 50

Studentship Projects

Project Reference Relationship Related To Start End Student Name
ES/P000665/1 01/10/2017 30/09/2027
1916051 Studentship ES/P000665/1 01/10/2017 30/09/2020 Gerd Buchmueller