Discussion Papers,
Statistics Norway, Research Department

Abstract: Most studies of heterogeneous labor inputs use classifications of high skilled and low skilled based on workers' educational attainment. In this study we explore a wage-based skill measure using information from a wage equation. Evidence from matched employer--employee data show that skill is attributable to many variables other than educational length, for instance experience and type of education. Applying our wage-based skill measure to a TFP growth analysis, we find that the TFP residual decreases, indicating that more of the change in value-added is picked up by our skill measure than when using a purely education-based measure of skill

Keywords: Skill composition; wages; TFP

JEL-codes: J31; D24; C23 February 2008

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