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.