Discussion paper

DP14102 The innovation premium to soft skills in low-skilled occuptions

Matched employee-employer data from the UK are used to analyze the wage premium to working in an innovative firm. We find that firms that are more R&D intensive pay higher wages on average, and this is particularly true for workers in some low-skilled occupations. We propose a model in which a firm’s innovativeness is reflected in the degree of complementarity between workers in low-skill and high-skilled occupations, and in which non-verifiable soft skills are an important determinant of the wages of workers in low-skilled occupations. The model yields additional predictions on training, tenure and outsourcing which we also find support for in data.


Aghion, P, R Blundell, R Griffith and A Bergeaud (eds) (2019), “DP14102 The innovation premium to soft skills in low-skilled occuptions”, CEPR Press Discussion Paper No. 14102. https://cepr.org/publications/dp14102