Skill composition : exploring a wage-based skill measure

Abstract

This study explores a wage-based skill measure using information from a wage equation. Evidence from matched employer-employee data show that skill is attributable to variables other than educational length, for instance experience and type of education. Applying our wage-based skill measure to TFP growth analysis, the TFP growth decreases, indicating that more of the change in value-added is picked up by our skill measure than when using a purely education-based skill measure.