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The Value of Skills

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  • Francis Green

Abstract

Many commentators have argued that "key skills" are becoming more important in modern workplaces. This paper draws on a survey that uses a methodology based on job analysis to measure skills at work, and estimates their implicit prices using a hedonic wage equation. The main new findings are that: (a) Computer skills are highly valued in the current British labour market. Even at "moderate" levels of complexity, for example using word-processing packages, workers using computers earn an average premium (after controlling for other job skills) in excess of 20 per cent, compared to those who do not use computers at all. (b) Professional communication and problem-solving skills are also highly valued. A one-standard-deviation increase in either type of skill raises pay by around 5 per cent, after allowing for all the controls. To a lesser extent, verbal skills also carry a pay premium for women. But planning, and client and horizontal communication skills, have little independent association with pay. Numerical skills also have no conditional link with pay, other than through being associated with more complex computer usage. (c) Jobs involving task variety earn more pay, but there is no strong evidence that greater autonomy is positively rewarded. (d) Participating in Quality Circles and, more tentatively, in organised work teams attracts a pay premium. (e) Jobs which require a long learning time, which deploy transferable skills, and/or for which there are higher qualifications requirements command a higher pay. (f) A reasonably complete job analysis provides a useful means of accounting for a wage distribution via a hedonic wage equation.

Suggested Citation

  • Francis Green, 1998. "The Value of Skills," Studies in Economics 9819, School of Economics, University of Kent.
    • Handle: RePEc:ukc:ukcedp:9819
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    References listed on IDEAS

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    Cited by:

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    2. Mane, Ferran & Miravet, Daniel, 2016. "Using the job requirements approach and matched employer-employee data to investigate the content of individuals' human capital," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 49(2), pages 133-155.
    3. Malcolm Brynin, 2002. "Overqualification in Employment," Work, Employment & Society, British Sociological Association, vol. 16(4), pages 637-654, December.
    4. R. Antonietti, 2006. "The skill content of technological change. Some conjectures on the role of education and job-training in reducing the timing of new technology adoption," Working Papers 556, Dipartimento Scienze Economiche, Universita' di Bologna.
    5. Hans Heijke & Christoph Meng & Ger Ramaekers, 2003. "An investigation into the role of human capital competences and their pay‐off," International Journal of Manpower, Emerald Group Publishing Limited, vol. 24(7), pages 750-773, November.
    6. Chris N. Sakellariou & Harry A. Patrinos, 2004. "Technology, computers and wages: evidence from a developing economy," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 47(3-4), pages 543-543.
    7. Fatima Suleman & Jean-Jacques Paul, 2008. "Diversity of human capital attributes and diversity of remunerating systems," Post-Print halshs-00260115, HAL.
    8. Fatima Suleman & Jean-Jacques Paul, 2007. "Diversity of human capital attributes and diversity of remunerations," Post-Print halshs-00181402, HAL.
    9. Corgnet, Brice & Rodriguez-Lara, Ismael, 2013. "Are you a good employee or simply a good guy? Influence costs and contract design," Journal of Economic Behavior & Organization, Elsevier, vol. 92(C), pages 259-272.
    10. Heijke,Hans & Meng,Christoph & Ramaekers,Ger, 2003. "An investigation into the role of human capital competences and their pay-off," ROA Research Memorandum 001, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    11. Bruce Pietrykowski, 2017. "Revaluing Low-Wage Work," Review of Radical Political Economics, Union for Radical Political Economics, vol. 49(1), pages 5-29, March.
    12. Peter Dolton & Gerry Makepeace & Helen Robinson, 2007. "Use It Or Lose It? The Impact Of Computers On Earnings," Manchester School, University of Manchester, vol. 75(6), pages 673-694, December.
    13. Aline Branche-Seigeot, 2013. "La valorisation des compétences de base sur le marché du travail français," Post-Print halshs-00794385, HAL.
    14. Heijke, J.A.M. & Meng, C.M., 2006. "Discipline-specific and academic competencies of the higher educated: their value in the labour market and their acquisition in education," ROA Working Paper 9E, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    15. Ganna Vakhitova & Christopher R. Bollinger, 2011. "Labor Market Return to Computer Skills: Using Microsoft Certification to Measure Computer Skills," Discussion Papers 46, Kyiv School of Economics.
    16. Ramaekers, G.W.M., 2007. "Evaluatie vernieuwing rapportages meting 2005 : resultaten internetenquête onder hogescholen en universiteiten, najaar 2006," ROA Working Paper 001, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    17. Karl Taylor, 2002. "The impact of technology and trade upon the returns to education and occupation," Applied Economics, Taylor & Francis Journals, vol. 34(11), pages 1371-1377.
    18. Francis Green & Alan Felstead & Duncan Gallie, 2003. "Computers and the changing skill-intensity of jobs," Applied Economics, Taylor & Francis Journals, vol. 35(14), pages 1561-1576.
    19. Shadle, Kyrstin, 2014. "The Effects of Skill Acquisition in Youth Jobs on Future Work and Earnings," ISU General Staff Papers 201401010800005034, Iowa State University, Department of Economics.
    20. Loo J. van & Semeijn J., 2001. "Measuring Competences in School-leaver Surveys," ROA Research Memorandum 002, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    21. L Feinstein, 2000. "The Relative Economic Importance of Academic, Psychological and Behavioural Attributes Developed on Chilhood," CEP Discussion Papers dp0443, Centre for Economic Performance, LSE.
    22. Handel, Michael J., 2003. "Implications of Information Technology for Employment, Skills, and Wages: A Review of Recent Research," MPRA Paper 80077, University Library of Munich, Germany.
    23. Francis Green & Donna James, 2001. "Do Male Bosses Underestimate their Female Subordinates' Skills? A Comparison of Employees' and Line Managers' Perceptions of Job Skills," Studies in Economics 0107, School of Economics, University of Kent.
    24. van Loo, J.B. & Semeijn, J.H., 2001. "Measuring competences in school-leaver surveys," ROA Research Memorandum 2E, Maastricht University, Research Centre for Education and the Labour Market (ROA).

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    More about this item

    Keywords

    Skills; Wages; Computers;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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