Matched employee-employer data from the UK are used to analyze the wage premium to working in an innovative firm. We find that firms that are more R&D intensive pay higher wages on average, and this is particularly true for workers in some low-skilled occupations. We propose a model in which a firm’s innovativeness is reflected in the degree of complementarity between workers in low-skill and highskilled occupations, and in which non-verifiable soft skills are an important determinant of the wages of workers in low-skilled occupations. The model yields additional predictions on training, tenure and outsourcing which we also find support for in data.
Authors
![Richard Blundell](/sites/default/files/styles/square_desktop/public/2024-03/Richard%20Blundell%20Head.jpg?itok=ow7e9OkA)
CPP Co-Director
Richard is Co-Director of the Centre for the Microeconomic Analysis of Public Policy (CPP) and Senior Research Fellow at IFS.
![Rachel Cassidy](/sites/default/files/styles/square_desktop/public/2022-08/Rachel_Griffith.jpg?itok=YovGgLq9)
CPP Co-Director, IFS Research Director
Rachel is Research Director and Professor at the University of Manchester. She was made a Dame for services to economic policy and education in 2021.
![Philippe Aghion](/sites/default/files/styles/square_desktop/public/2022-06/Philippe_Aghion.jpg?itok=5T5iMNaV)
Research Fellow London School of Economics
Philippe is an IFS Research Fellow, a Professor of Economics at LSE, at the College de France and at INSEAD, and a Fellow at the Econometric Society.
![Person graphic](/sites/default/files/styles/square_desktop/public/2022-06/IFS-person-graphic.png?itok=hWCtTSrz)
Antonin Bergeaud
Report details
- Publisher
- Centre for Economic Performance
Suggested citation
Aghion, P et al. (2020). The Innovation Premium to Soft Skills in Low-Skilled Occupations. London: Centre for Economic Performance. Available at: https://ifs.org.uk/publications/innovation-premium-soft-skills-low-skilled-occupations (accessed: 30 June 2024).
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