Wage Growth of Less Educated Workers: The Importance of Social Skills

The authors use matched employee–employer data from the UK to investigate the importance of social skills – in particular, teamwork and communication with co-workers – as a driver of wage growth for workers with lower formal education. They find that in social skill tasks, a significant fraction of less educated workers enjoy wage progression with tenure, and higher returns in firms with more educated co-workers. They rationalise these dynamics through a model in which social skills – initially opaque to both employee and employer – are learned about over time through complementarity with co-workers.