This paper aims to investigate the influence of skill selection on productivity gains. To do this, using the productivity of intermediate goods and the average level of technology models, we construct a model in which we show that the implementation of policy based on investment in large technological projects and the selection of the right workers for high-skill tasks left back by automation in technologically advanced firms are the key for the productivity growth. Our model indicates that the size of the firm’s project affects the productivity gain. Less investment in technology adoption and creation by small firms generates less productivity. However, the investment in large projects through technology adoption from the leader or innovation via R&D investment enhances both firms’ productivity growth and competitiveness and aggrandizes them technologically. The automation process in these firms leaves behind an immense pool of high-skill tasks that need to be filled with a qualified workforce. Thus, selecting the right workers becomes extremely important in productivity growth. The exit from the workplace of low-skill workers with obsolete knowledge will follow the need for high-skill workers with knowledge that suits the new technologies used in the firms making room for machines in repetitive tasks and high-skill workers in high-skill jobs. Besides, we find that high-skill workers increase productivity growth due to the high-skill jobs, which affects the firms’ productivity growth. To put it simply, technologically advanced firms, to improve productivity growth, should adopt strategies based on selecting qualified workers that can increase the productivity of high-skill tasks. However, the education system should keep up with the new skill tasks generated by automation in training high-skill workers in the modern work market.
Foster, L., Haltiwanger, J. and Syverson, C. (2008) Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability? American Economic Review, 98, 394-425. https://doi.org/10.1257/aer.98.1.394
Dosi, G., Moschella, D., Pugliese, E. and Tamagni, F. (2015) Productivity, Mar-ket Selection, and Corporate Growth: Comparative Evidence across US and Europe. Small Business Economics, 45, 643-672. https://doi.org/10.1007/s11187-015-9655-z
Alfaro, L. and Chen, M.X. (2018) Selection and Market Reallocation: Productivity Gains from Multinational Production. American Economic Journal: Economic Policy, 10, 1-38. https://doi.org/10.1257/pol.20150437
Jones, P., Mengistae, T. and Zeufack, A. (2018) Selection, Firm Turnover, and Productivity Growth: Do Emerging Cities Speed up the Process? Policy Research Working Papers. https://doi.org/10.1596/1813-9450-8291
Alon, T., Berger, D., Dent, R. and Pugsley, B. (2018) Older and Slower: The Startup Deficit’s Lasting Effects on Aggregate Productivity Growth. Journal of Monetary Economics, 93, 68-85. https://doi.org/10.1016/j.jmoneco.2017.10.004
álvarez, R. and Gonzalez, A. (2020) Competition, Selection, and Productivity Growth in the Chilean Manufacturing Industry. Industrial and Corporate Change, 29, 877-892. https://doi.org/10.1093/icc/dtaa005
Acemoglu, D., Aghion, P. and Zilibotti, F. (2006) Distance to Frontier, Selection, and Economic Growth. Journal of the European Economic Association, 4, 37-74. https://doi.org/10.1162/jeea.2006.4.1.37
Adamopoulos, T., Brandt, L., Leight, J. and Restuccia, D. (2017) Misalloca-tion, Selection and Productivity: A Quantitative Analysis with Panel Data from China. NBER Working Papers 23039, National Bureau of Economic Research, Inc. https://doi.org/10.3386/w23039
Benhabib, J. and Spiegel, M.M. (2005) Chapter 13 Human Capital and Technology Diffusion. In: Handbook of Economic Growth, Elsevier, 935-966. https://doi.org/10.1016/s1574-0684(05)01013-0
Vandenbussche, J., Aghion, P. and Meghir, C. (2006) Growth, Distance to Frontier and Composition of Human Capital. Journal of Economic Growth, 11, 97-127. https://doi.org/10.1007/s10887-006-9002-y
Islam, R. (2010) Human Capital Composition, Proximity to Technology Frontier and Productivity Growth. Monash Economics Working Papers 23-10, Monash University, Department of Econom-ics.
Danquah, M. and Ouattara, B. (2014) Productivity Growth, Human Capital and Distance to Frontier in Sub-Saharan Africa. Journal of Economic Development, 39, 27-48. https://doi.org/10.35866/caujed.2014.39.4.002
