Skills and the Re-Organization of Production

(joint with Niklas Engbom, Hannes Malmberg, Tommaso Porzio and Todd Schoellman)

Abstract:

We study the role of skills in promoting changes in the organization of production over the path of economic development. Using labor force surveys from countries at different levels of development, we show that skills account for most of the variation in the occupational composition across countries. Moreover, using matched employer-employee data from Brazil and Sweden, we document that firms are a key mediating factor of the relationship between skills and occupational choices.  We develop an analytical model with a joint occupational-firm structure choice to help understand these patterns. We calibrate a quantitative version of the model to our data and use it to understand the role of human capital for structural transformation within and across sectors.