Working Paper: CEPR ID: DP1036
Authors: Stephen N. Broadberry; Karin Wagner
Abstract: In this paper we relate trends in the accumulation of human capital in Britain, Germany and the United States to overall production strategy and productivity trends. In the United States a strategy of standardized mass production led to high levels of labour productivity and concentration on the development of managerial capabilities, but neglect of the skills of the shop-floor labour force, while in Britain and Germany concentration on craft production led to greater emphasis on shop-floor skills. After the Second World War, however, British firms made an unsuccessful move towards standardized mass production. Since shop-floor skills were neglected, British firms were left in a weak position to take advantage of the recent switch of technological leadership away from American mass production methods to German modern craft production or `flexible production' methods, intensive in the use of skilled shop-floor labour within a small batch industrial environment. British manufacturing also adopted an American style `mission oriented' approach to R&D in contrast to the German style `diffusion oriented' approach, which helped to reinforce the move away from craft production. Since the 1980s, Britain has returned to a more skilled labour intensive strategy but still has a large skills gap to make good.
Keywords: human capital; productivity; manufacturing
JEL Codes: J24; N30; N60; O52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| mass production (L23) | labor productivity (J24) |
| mass production (L23) | neglect of shopfloor skills (J24) |
| lack of investment in shopfloor skills (J24) | decline in competitive advantage (F12) |
| differences in human capital accumulation strategies (J24) | manufacturing performance (L23) |
| investment in skilled labor (J24) | manufacturing success (L69) |