Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/125022
Authors: 
Maré, Dave C.
Hyslop, Dean
Fabling, Richard
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 9510
Abstract: 
This paper examines the relationship between firm multifactor productivity growth (mfp) and changing skill levels of labour in New Zealand, over the period 2001-12, using longitudinal data from Statistics New Zealand's Longitudinal Business Database (LBD) and Integrated Data Infrastructure (IDI). We estimate that the average skill of workers declined by 1.8% over the period, reflecting strong employment growth for workers with lower than average skill levels. The net decline was the combined effect of a 3.6% decline in unobserved skill outweighing a 1.8% increase in observed skill, resulting in 1.8% slower estimated skill-adjusted labour growth (13.3%) than the 15.0% growth in full-time equivalent (FTE) employment. Mirroring the skill-dilution, skill-adjusted mfp growth averaged 0.24% per annum over the period compared to 0.14% pa for unadjusted growth. The patterns were stronger over the pre-GFC period to 2008, during which adjusted and unadjusted mfp grew 0.57% pa and 0.42% pa respectively. Our analysis of the effect of changing skill on mfp growth finds that the impact of skill adjustment was almost entirely due to changing skill composition within continuing firms.
Subjects: 
productivity
reallocation
decomposition
linked employer-employee data
LBD
firm turnover
JEL: 
D24
J24
Document Type: 
Working Paper

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