Organizational Capital, Skills and Productivity

Abstract

This paper studies how industries' investment in organizational capital (OC) and workforce skills relate to productivity, building on OECD estimates of OC, output data from the OECD Structural Analysis (STAN) database, and skill indicators from the OECD Programme for the International Assessment of Adult Competencies (PIAAC). The paper finds that, at the industry level, workers' numeracy and Science, Technology, Engineering and Mathematics (STEM) skills correlate positively with productivity, and that the positive correlation of STEM skills with productivity is generally larger for OC workers. Moreover, dispersion in Information and Communication Technology (ICT) skills harms industry performance. In fact, a gap between the ICT skills of OC and non-OC workers seems to trigger a “lost in translation” type of mechanism, whereby communication and information flows become less fluid and impinge upon the economic performance of sectors, correlating negatively with productivity.