Working Paper: CEPR ID: DP14102
Authors: Philippe Aghion; Antonin Bergeaud; Richard William Blundell; Rachel Griffith
Abstract: Matched employee-employer data from the UK are used to analyze the wage premium to working in an innovative firm. We find that firms that are more R&D intensive pay higher wages on average, and this is particularly true for workers in some low-skilled occupations. We propose a model in which a firm’s innovativeness is reflected in the degree of complementarity between workers in low-skill and high-skilled occupations, and in which non-verifiable soft skills are an important determinant of the wages of workers in low-skilled occupations. The model yields additional predictions on training, tenure and outsourcing which we also find support for in data.
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Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Firm innovativeness (O31) | Wage premium for low-skilled workers (J31) |
| Complementarity of high-skilled and low-skilled workers (J24) | Wage premium for low-skilled workers (J31) |
| Soft skills (J24) | Wage premium for low-skilled workers (J31) |
| Innovative firms (O31) | Longer tenure for low-skilled workers (J29) |
| Investment in training (J24) | Enhanced productivity of low-skilled workers (J24) |