Fact of the Week: Low-skilled Workers Earn 20 Percent More at Highly Innovative Firms

Caleb Foote April 13, 2020
April 13, 2020

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Source: Philippe Aghion, et al., “The innovation premium to soft skills in low-skilled occupations,” CEP Discussion Paper No 1665, December 2019.

Commentary: It is commonly assumed that the wealth and other benefits that highly innovative firms produce are concentrated among high-skilled workers, since they are the ones who are most likely to be innovating. But a new study casts doubt on this presumption, using matched employee-employer data from the United Kingdom. Controlling for firm and employee characteristics, it finds that low-skilled workers earn 20 percent more at firms with high R&D intensity, compared to firms that do not conduct significant R&D.