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Fact of the Week: Engineers and Other Technical Workers Raise Firm-Level Productivity by 4 to 5 Percent

Fact of the Week: Engineers and Other Technical Workers Raise Firm-Level Productivity by 4 to 5 Percent

August 7, 2023

Source: James Harrigan et al., “Techies and Firm Level Productivity,” Center for Economic Studies (CESifo) Working Paper, no. 10468, May 2023.

Commentary: In a recent working paper for the Center of Economic Studies and the ifo Institute, James Harrigan and colleagues analyzed data from Déclaration Annuelle de Données Sociales, Fichier Approché des Résultats Ésane, French Customs, the Training and Professional Qualification (TPQ) survey, the Means dedicated to Research and Development (R&D survey), and the Information and Communication Technology survey (ICT survey) to examine the impact of techies, or engineers and other technical workers, on firm-level productivity. Looking at these datasets, the authors found that techies raise firm-level productivity, regardless of whether they are R&D, information technology, or other technical workers. Techies raised firms’ productivity by 4 to 5 percent more than otherwise expected without the employment of techies in a year. This is partially because techies are related to patenting and innovation.

Techies raise firms’ future productivity even when a small number of them are employed. And this effect only increases with the number of techies employed. Firms with a median level of techies employed had higher productivity of 3.9 log points in manufacturing and 4.9 log points higher in non-manufacturing industries than those that did not have techies. In the long run, firms with a median level of techies had productivity levels that were 57.45 percent higher in manufacturing and 48.29 percent in non-manufacturing. Although R&D techies contribute to this enhanced productivity, other techie workers are found to have the most significant impact on productivity in both manufacturing and non-manufacturing. Other techie workers raised productivity 1.7 times in manufacturing and 5.3 times in non-manufacturing sectors more than R&D techies. As a result of the study, the authors conclude that a balance between “basic research and investment in more applied technical skills” is important.

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