Complementarities among types of education in affecting firms' productivity

Abstract

This article uses Swiss firm‐level panel data to show that complementarities among workers with different types of education affect firms' productivity. We consider workers with four different types of education: no post‐secondary education, upper secondary vocational education and training (VET), tertiary professional education, and tertiary academic education. To account for possible endogeneity, we exploit within‐firm variation and employ a structural estimation technique that uses intermediate inputs as a proxy for unobserved productivity shocks. Our results suggest that workers with an upper secondary VET education are complementary to workers with a tertiary academic education, while workers with no post‐secondary education are complementary to workers with a tertiary professional education. Altogether, our findings highlight the importance of vertical and horizontal education diversity within firms.