Project 2.1 Skills, Innovation, and Economic Growth

Project 2.1 Skills, Innovation, and Economic Growth

Project Name: Project 2.1 Skills, Innovation, and Economic Growth
Project Leader:
Geoff Mason, Rebecca Riley
Other Project Team Members:
Chiara Rosazza Bondibene, Anna Rosso
Project 2.1 Skills, Innovation, and Economic Growth

Project Details

To what extent do cross-country differences in skills affect economic performance through innovation-related mechanisms?

This project is investigating the extent to which relative productivity performance in different countries and within the UK reflects differences in the skills required to accumulate ‘intangible’ assets such as innovation capacity, designs and ‘organisational capital’ (e.g. business practices and processes). 

Within the UK it is examining the role of intangible capital in generating innovation and raising economic performance of businesses, drawing on linked data from the Annual Respondents Database, the Business Enterprise Research and Development Survey and the Annual Survey of Hours and Earnings. 

At cross-country level the project is investigating which types of skills contribute most to absorptive capacity, innovation and productivity performance. This research makes use of a cross-country industry-level dataset covering the UK, US, France, Germany, Netherlands, Sweden, Denmark and Spain.

Contacts:

Geoff Mason () and Rebecca Riley ()

Research findings

Project publications:

Recent journal articles:

Peters, B., Riley, R., Siedschlag, I. et al. (2018) Internationalisation, innovation and productivity in series: evidence from Germany, Ireland and the United Kingdom, Review of World Economics, DOI: 

Abstract: This paper examines the links between internationalisation, innovation and productivity in service enterprises. For this purpose, we use micro data from the Community Innovation Survey 2008 in Germany, Ireland and the United Kingdom, and estimate an augmented structural model. Our empirical evidence highlights the importance of internationalisation in the context of innovation outputs in all three countries. Our results indicate that innovation in service enterprises is linked to higher productivity. Among the innovation types that we consider, the largest productivity returns were found for marketing innovations.

Recent papers:

Driving Productivity Growth: The Role of Firm-Specific Knowledge Assets, Paper presented at International Workshop on Productivity, Innovation and Intangible Investments, Assisi, Italy, 21-23 September 2017.

Rebecca Riley* (NIESR and LLAKES) and Chiara Rosazza Bondibene (KU Eichstätt-Ingolstadt)

Abstract: Intangibles are increasingly seen as the “missing input” in the knowledge economy and it is now widely accepted that traditional productivity measurement that focuses on labour and tangible capital inputs only does not account adequately for key factors explaining differences in productivity across firms, industries and countries. Much existing economic study of intangibles focuses on measurement at the macroeconomic level. But, intangibles are embedded in the firm. Much of the micro-analysis of intangibles has been ad hoc, typically relying on indicator variables and capturing limited aspects of intangible capital. In this paper we construct a dataset of UK firms 1998-2014, including measures of a broad set of capitalised intangible investments. We then investigate how these firm-specific knowledge assets contribute to the differential productivity performance of firms, both as individual factors of production and in combination with other factors.

Which skills contribute most to absorptive capacity, innovation and productivity performance? Evidence from the US and Western Europe, Research Paper 61, London: Centre for Research on Learning and Life Chances (LLAKES).

Geoff Mason* (LLAKES and UCL Institute of Education), Ana Rincon-Aznar (NIESR) and Francesco Venturini (University of Perugia)

Abstract: Skills are widely recognised as central to firms’ and national industries’ ‘absorptive capacity’, that is, their ability to identify and make effective use of knowledge, ideas and technologies that are generated elsewhere. But identification of the specific kinds of education and skills that contribute most to the development of absorptive capacity is often hampered by the use of skill measures as proxies for absorptive capacity itself. In this study, drawing on a cross-country industry-level dataset, we retain separate measures of key components of absorptive capacity – skills, R&D investments and openness to foreign trade and investment – in order to examine the strength of their respective contributions to innovation and ultimately to productivity growth. We find important roles for both high-level skills and upper intermediate (technician-level) skills in converting the knowledge sourcing opportunities provided by openness into innovative outputs (such as new ideas for products and processes). When these innovations are combined with other inputs into the production of final goods and services, productivity growth is enhanced not just by high-level skills and upper intermediate skills but also by other types of skill, including uncertified skills (for example, skills acquired through informal on-the-job training and work experience).

International Workshop on Productivity, Innovation and Intangible Investments 

Assisi, Italy, September 21-23, 2017

Organisers: Centre for Research on Learning and Life Chances (LLAKES) at UCL Institute of Education, National Institute of Economic and Social Research (NIESR), London, UK and University of Perugia, Italy           

Presenters' slides now availabley at:        

Programme: * denotes presenter

Keynote session:              

Jakob Madsen* and Md. Rabiul Islam (Monash University, Australia)  Back to the Past: Is Growth Reverting to Pre-Industrial Levels?

Session 1: Productivity and intangible investments

Rebecca Riley* (NIESR, ESCoE) and Chiara Rosazza Bondibene (KU Eichstätt-Ingolstadt) Driving Productivity Growth: The Role of Firm-Specific Knowledge Assets

Cecilia Jona-Lasinio * (ISTAT and LUISS, Libera Università Internazionale degli Studi Sociali, Rome),  Stefano Manzocchi (LUISS) and  Valentina Meliciani (LUISS)  Intangible capital and participation in global value chains: empirical evidence on a sample of European countries

Stefano Bolatto (University of Bologna), Alireza Naghavi* (University of Bologna), Gianmarco Ottaviano (LSE and University of Bologna) and Katja Zajc (University of Ljubljana)  Intangible assets and the organization of global supply chains

Session 2: Productivity, wages and occupational change

Giuseppe Berlingieri (OECD and ESSEC Business School, France), Patrick Blanchenay (University of Toronto) and Chiara Criscuolo* (OECD)  The Great Divergence(s) in wages and productivity

Mirella Damiani (University of Perugia), Fabrizio Pompei* (University of Perugia) and Stefania Cardinaleschi (Italian National Institute of Statistics, ISTAT)  Knowledge-intensive sectors and the role of collective performance-related pay  

Luca Marcolin* (OECD), Sebastien Miroudot (OECD) and Mariagrazia Squicciarini (OECD)  The routine content of occupations: new cross-country measures based on PIAAC

Session 3: Productivity, absorptive capacity and innovation

Richard Harris* and Ji Yan (Durham University)  Absorptive capacity: definition, measurement and importance

Geoff Mason* (UCL Institute of Education and NIESR, London), Ana Rincon-Aznar (NIESR) and Francesco Venturini (University of Perugia)  Which skills contribute most to absorptive capacity, innovation and productivity performance? Evidence from the US and Western Europe

Giuliana Battisti* (University of Warwick)  and Paul Stoneman (University of Warwick)  Measuring innovation as the successful exploitation of new ideas using international firm level panel data

Session 4: Technology, capital intensity and trends in the labour share

Kyoji Fukao* (Hitotsubashi University, Japan), Cristiano Perugini (University of Perugia), Samil Paul (Hitotsubashi University, Japan)  Technology, capital, skills and the long-run dynamics of the labour share in Japan

Mary O’Mahony (Kings College London), Michela Vecchi* (Middlesex University) and Francesco Venturini (University of Perugia)  The long-run decline in labour share: technology and heterogeneous capital

Gilbert Cette (Banque de France and Aix-Marseille School of Economics), Jimmy Lopez* (University of Bourgogne) and Jacques Mairesse (CREST, ParisTech-ENSAE; UNU-MERIT, Maastricht University; NBER)  Labour market regulations and capital intensity

Session 5: Productivity, competitiveness and education

Ana Rincon-Aznar* (NIESR, ESCoE), Rebecca Riley (NIESR, ESCoE) and Lea Samek (NIESR and Kings College London)  Productivity and competitiveness in the UK

Carol Corrado (Conference Board, New York), Mary O’Mahony * (Kings College London) and Lea Samek* (NIESR and Kings College London).  Measuring education services as intangible social infrastructure