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CEP discussion paper
Skill biased management: evidence from manufacturing firms
Andy Feng and Anna Valero
January 2019
Paper No' CEPDP1594:
Full Paper (pdf)

JEL Classification: I23; I26; J24; L2; M2

Tags: management practices; human capital; universities; complementarities

This paper investigates the link between management practices and workforce skills in manufacturing firms, exploiting geographical variation in the supply of human capital. Skills measures are constructed using newly compiled data on universities and regional labour markets across 19 countries. Consistent with management practices being complementary with skills, we show that firms further away from universities employ fewer skilled workers and are worse managed, even after controlling for a rich set of observables and fixed effects. Analysis using regional skill premia suggests that variation in the price of skill drives these relationships.