Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/202779 
Year of Publication: 
2019
Series/Report no.: 
IZA Discussion Papers No. 12433
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Matched worker-firm data from Danish manufacturing reveal that 1) industries differ in within-firm worker skill dispersion, and 2) the correlation between within-firm skill dispersion and productivity is positive in industries with higher average skill dispersion. We argue that these patterns are a manifestation of technological differences across industries: firms in the "skill complementarity" industries profit from hiring workers of similar skill level, whereas firms in the "skill substitutability" industries benefit from hiring workers of different skill levels. An empirical method we devise produces a robust classification of industries into the distinct complementarity and substitutability groups. Our study unveils hitherto unnoticed technological heterogeneity between industries within the same economy, and demonstrates its importance. Specifically, we show through simulations on a simple general equilibrium model that failing to take technological heterogeneity into account results in large prediction errors.
Subjects: 
skill dispersion
complementarity
production technology
firm productivity
JEL: 
D24
D58
J2
Document Type: 
Working Paper

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