Productivity and the allocation of skills

[The authors use] linked employer-employee data from 2004-2012, combined with individual qualifications data from 1994-2012, to study how graduates with different skills fare in the labour market in the six years after studying. [The authors] find that graduates experience improvements in earnings, and that they systematically move between jobs, industries and locations in a pattern that is consistent with their securing better job matches, particularly for high level [science, technology, engineering and mathematics] STEM graduates. [The authors] then estimate joint production function...  [+] Show more

[The authors use] linked employer-employee data from 2004-2012, combined with individual qualifications data from 1994-2012, to study how graduates with different skills fare in the labour market in the six years after studying. [The authors] find that graduates experience improvements in earnings, and that they systematically move between jobs, industries and locations in a pattern that is consistent with their securing better job matches, particularly for high level [science, technology, engineering and mathematics] STEM graduates.

[The authors] then estimate joint production function and wage equations to see how the skill composition of a firm's employees correlates with productivity, and compare this with how the skill composition correlates with its wage bill. [The] results suggest that degree graduates make a growing positive contribution to production in the six years after graduation, with associated wage growth. There is variation in relative productivity and wages across groups of graduates that differ by field of study and level of qualification.

Published abstract.