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The impact of educational mismatch on returns to R&D: evidence from manufacturing in OECD countries

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  • Ioana A. Igna
  • Francesco Venturini

Abstract

This paper investigates the effect of educational mismatch of R&D workers on firm's returns to innovation. R&D labour mismatch emerges when R&D workers have competencies different from those required by their occupation providing a contribution to innovation lower than in the case of perfect educational matching. By estimating a knowledge production function on data for 13 manufacturing industries from 16 OECD countries between 2003 and 2011, we find that R&D labour mismatch may cause returns to R&D investment to be between 10 and 15% lower than estimated in the literature. These results are robust to controlling for institutional factors, simultaneity feedbacks and other mis-specification issues. The detrimental effect of the misallocation of R&D labour is found to be stronger in those sectors where R&D activities have greater potential (returns), i.e. high-tech sectors.

Suggested Citation

  • Ioana A. Igna & Francesco Venturini, 2019. "The impact of educational mismatch on returns to R&D: evidence from manufacturing in OECD countries," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 28(5), pages 435-464, July.
    • Handle: RePEc:taf:ecinnt:v:28:y:2019:i:5:p:435-464
    DOI: 10.1080/10438599.2018.1527548
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    Cited by:

    1. Michela Vecchi & Catherine Robinson & Maja Savic & Marina Romiti, 2023. "Vertical and Horizontal Mismatch in the UK: Are Graduates' Skills a Good Fit for Their Jobs?," National Institute of Economic and Social Research (NIESR) Discussion Papers 548, National Institute of Economic and Social Research.
    2. Xue, Biao & Lin, Yan & Ren, Fangxiao & Li, Runfo, 2024. "Business environment ecosystem and manufacturing upgrading: A configurational approach," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 1225-1237.

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