Skill Dispersion and Firm Productivity: An Analysis with Employer‐Employee Matched Data

Abstract

We study the relation between workers' skill dispersion and firm productivity using a unique data set of Italian manufacturing firms with individual records on all their workers. Our measure of skill is the individual worker's effect from a wage equation. We find that a firm's productivity is positively related to skill dispersion within occupational status groups (production and nonproduction workers) and negatively related to skill dispersion between these groups. Con-© 2008 by The University of Chicago. All rights reserved.