Senior Academic Seminar: Rachel Griffith (University of Manchester)

Wage progression in low-educated workers (with Philippe Aghion, Antonin Bergeaud and Richard Blundell)

Abstract:  Inequalities are at the forefront of today’s public and policy debates. Earnings of low educated workers have performed poorly in recent decades, and look likely to be hit hard by the global pandemic. In the UK earnings inequality is increasingly persistent, with the poor and low educated seeing little pay progression and being more likely to stay poor. In this paper we study the role of soft skills in the wage dynamics of low educated workers. We show that wage and tenure prospects are better in occupations where the tasks and skills associated with a workers ability to communicate and interact effectively, especially for low educated workers. The payoff is higher in more technologically intensive firms. We consider a model in which these soft skills are complementary to the firm's other assets, which helps us to think about the relevant policy levers to improve the prospects for low-wage/low-educated workers.