The impact of educational mismatch on returns to R&D: evidence from manufacturing in OECD countries. Issue 5 (4th July 2019)

• Record Type: Journal Article
• Authors: Igna, Ioana A.; Venturini, Francesco
• Is Part Of: Economics of innovation and new technology. Volume 28:Issue 5(2019)
• Page Start: 435
• Page End: 464
• Publication Date: 2019-07-04
• Subjects: Educational mismatch -- returns to education in R&D -- patents -- R&D -- OECD manufacturing; Technological innovations -- Economic aspects -- Periodicals; 338.06405
• DOI: 10.1080/10438599.2018.1527548
• Languages: English
• ISSNs: 1043-8599

Abstract

ABSTRACT: This paper investigates the effect of educational mismatch of R&D workers on firm's returns to innovation. R&D labour mismatch emerges when R&D workers have competencies different from those required by their occupation providing a contribution to innovation lower than in the case of perfect educational matching. By estimating a knowledge production function on data for 13 manufacturing industries from 16 OECD countries between 2003 and 2011, we find that R&D labour mismatch may cause returns to R&D investment to be between 10 and 15% lower than estimated in the literature. These results are robust to controlling for institutional factors, simultaneity feedbacks and other mis-specification issues. The detrimental effect of the misallocation of R&D labour is found to be stronger in those sectors where R&D activities have greater potential (returns), i.e. high-tech sectors.