Template-Type: ReDIF-Paper 1.0
Author-Name: David C Maré
Author-X-Name-First: David
Author-X-Name-Last: Maré
Author-Email: dave.mare@motu.org.nz
Author-Workplace-Name: Motu Economic and Public Policy Research
Author-Name: Dean R Hyslop
Author-X-Name-First: Dean
Author-X-Name-Last: Hyslop
Author-Email: dean.hyslop@motu.org.nz
Author-Workplace-Name: Motu Economic and Public Policy Research
Author-Name: Richard Fabling
Author-X-Name-First: Richard
Author-X-Name-Last: Fabling
Author-Email: richard.fabling@xtra.co.nz
Author-Workplace-Name: Independent Researcher
Title: Firm Productivity Growth and Skill
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.
Length: 53 pages
Creation-Date: 2015-11
File-URL: https://motu-www.motu.org.nz/wpapers/15_18.pdf
Number: 15_18
Classification-JEL: D24, J24
Keywords: Productivity, reallocation, decomposition; LBD, Linked Employer-Employee Data, firm turnover.
Handle: RePEc:mtu:wpaper:15_18