After two decades of low productivity growth, policymakers maintain a keen interest in understanding the types of policies that can restore productivity prospects.The 2023 Survey of Adult Skills (PIAAC) reveals significant cross-country differences in adult skills that carry important implications for productivity.
Cross-country analysis shows a positive relationship between labour productivity and the average level of adult skills at the industry level, which is estimated to account for one-quarter to one-third of cross-country differences in industry productivity.
But the ways in which skilled workers are allocated to different job roles and firms also matters. Higher productivity is observed in industries with lower labour market mismatches and where high-skilled workers are employed in larger and more dynamic firms. Differences in these patterns of allocation can account for nearly 15% of the productivity gaps between countries.
These findings highlight the importance of policies aimed at enhancing adult skills and improving labour market adaptability to drive productivity growth.
