Management, skills and productivity

Abstract

This paper studies how industries’ investment in organisational capital (OC) and workforce skills relate to productivity, building on OECD estimates of OC, output data from the OECD Structural Analysis (STAN) database, and both cognitive and task-based skill indicators from the OECD Programme for the International Assessment of Adult Competencies (PIAAC). The paper finds that at the industry level, workers’ numeracy and endowment of skills related to science, technology, engineering and mathematics (STEM) correlate positively with productivity, and that the positive correlation of STEM skills with productivity is generally larger for OC workers. The paper also finds evidence that skills dispersion harms industry performance. A gap between the ICT skills of OC and non-OC workers seems to trigger a “lost in translation” type of mechanism, whereby communication and information flows become less fluid and impinge upon the economic performance of sectors, correlating negatively with productivity.