Working Paper: CEPR ID: DP18456
Authors: Philippe Aghion; Antonin Bergeaud; Richard Blundell; Rachel Griffith
Abstract: We use matched employee-employer data from the UK to highlight the importance of social skills, including the ability to work well in a team and communicate effectively with co-workers, as a driver for individual wage growth for workers with few formal educational qualifications. We show that lower educated workers in occupations where social skills are more important experience steeper wage growth with tenure, and also higher early exit rates, than equivalent workers in occupations where social skills are less important. Moreover, the return to tenure in occupations where social skills are important is stronger in firms with a larger share of higher educated workers. We rationalize our findings using a model of wage bargaining with complementarity between the skills and abilities of less educated workers and the firm’s other assets.
Keywords: team work; social skills; individual wage growth; firm pay premium
JEL Codes: J31; J24; L25
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Importance of social skills in occupation (J29) | Individual wage growth (J31) |
| Higher educated workers in firms (J24) | Return to tenure in occupations requiring social skills (J29) |
| Occupations requiring more social skills (J44) | Higher early exit rates (J26) |