AI Summary. Across countries, industries employing more highly educated workers recorded faster productivity growth than low-education industries, rising by more than 0.34 log points versus 0.20 log points over roughly three decades. Wage growth followed the same direction but by a smaller margin, a pattern consistent with skill-biased technological change operating globally.
Edward Lazear National Bureau of Economic Research New Ed Lazear paper using OECD data (including hours worked) implicitly supports that idea the labor markets have segmented and high skill (he uses education as a proxy for skill) workers are increasingly servicing other high skilled workers, "..heart of this research, is to show thataggregate productivity masks a key part of the story. The productivity distribution has not merely shifted. It has stretched out. Productivity among more educated workers has grown more rapidly than productivity of less educated workers.This is consistent with growing wage dispersion, where the wages of highly educated, high wage workers have pulled away from wages of less educated, low wage workers..."

Edward Lazear, "Productivity and Wages: Common Factors and Idiosyncrasies Across Countries and Industries," National Bureau of Economic Research, November 2019, https://www.nber.org/papers/w26428“…. heart of this research, is to show that aggregate productivity masks a key part of the story. The productivity distribution has not merely shifted. It has stretched out. Productivity among more educated workers has grown more rapidly than productivity of less educated workers. This is consistent with growing wage dispersion, where the wages of highly educated, high wage workers have pulled away from wages of less educated, low wage workers..."
His core finding,
“…. The commonality of the pattern across countries suggests that global rather than institutional factors are at work. The most obvious candidate is the often discussed biased nature of technological change that has benefitted disproportionately highly skilled workers.....It is difficult to observe productivity at the individual level, but industry data on productivity can be linked with demographic and data on education. This permits an examination of changes in productivity industries that are dominated by highly educated workers versus those dominated by less educated ones. By doing this, it is possible to determine whether the productivity distribution has spread out over time consistent with the changing wage distribution..... Cross-industry data provide evidence that rather than merely displacing upward, the entire distribution has changed shape. The upper tail of the distribution has moved away from the lower tail. The rise in productivity of the high skilled, typically highly educated workers, relative to the low skilled typically less educated workers, has generated an increase in skill disparity, which is consistent with observed increases in inequality over time....There are a number of potential causes of the spreading out of the productivity distribution.... One is the frequently referenced skill-biased technological change that postulates that changes in technology have affected the productivity of highly educated workers more than less educated ones..... Another is that trade has increased in a way that enhances the productivity and wages of the most skilled workers...A third possibility is that schools in the United States may have become more proficient over time in educating the better students relative to the weaker ones.... The main conclusion is that changes in productivity at different educational levels are more than sufficient to account for changes in the wage distribution. The college-high school premium in wages has increased by much less than the college-high school premium in productivity has increased over the past almost-three decades. These changes are consistent with a number of possible causes, which include skill-biased technological change, trade patterns that have altered prices in a non-neutral fashion, and changes in human capital production technologies that favor tertiary over primary and secondary education. The analysis cannot address the specific cause, nor does the fact that non-neutral productivity growth can account for growing skill differences lessen the problem...”
He hypothesis these returns could be caused by several factors but doesn’t attempt to attribute causality
“…The most obvious illustration of the correlation between wages and productivity at the aggregate level comes from cross country comparisons. OECD data on wages and productivity across countries make immediately apparent that the two are linked. Figure 2, which plots the 2017 average wage against labor productivity (the last year for which data are available),defined as output in US dollars per hour worked, reveals the close co-movement of wages with productivity. Countries like Switzerland, Norway, Denmark and Luxembourg all have both high productivity and high wages. At the other end, countries like Mexico, Chile, Latvia, Poland and Estonia have low productivity and low wages.The correlation coefficient between log wage and log productivity in 2017 is.84…The most important finding is summarized in figure 9. Forty 3-digit industries for which complete productivity, wage and education data are available over the period 1989-2017 are split into two groups. The top and bottom groups are comprised of industries that rank in the highest and lowest 50% based on average education level in the industry in 1989. The left two bars compare productivity growth in logs for high and low education industries. Productivity in the top education industries grew by over.34 log points between 1989 and 2017. Productivity in the bottom education industries grew only.20 log points during that same 30 year period. The right two bars compare wage growth in those same industries. The same pattern holds, but not with the same force. Wages in highly educated industries grew by.26 log points while those in the low education half grew by.24 log points during the 1989-2017 period. The difference in productivity between the groups is more pronounced than the difference in wages. This simple comparison suggests that productivity growth differences between groups is more than sufficient to explain the better wage growth that more educated workers enjoyed as compared with less educated workers….”
This is supported by his Figure 2 figure for the cross country comparisons, which mirrors our relationship btw skill and hourly wage (which was the OECD math/hourly wage data) which we used in the chapter and Figure 9 is his charting of the change in the relationship btw productive and wages in the US by skill level
"....There is compelling evidence that productivity and wages are linked. The pattern is clear in cross-country comparisons and for virtually all individual countries over time. Furthermore, all parts of the income distribution seem to benefit from increases in aggregate productivity. The mean wage rises as does the wage of the lowest wage earners and highest wage earners when productivity increases. It is also true that wages have spread out over time in most OECD countries where data are available. The ratio of wages of the 90th percentile worker to the median worker has risen in 15 out of 17 countries between 1997 and 2015. In the United States, this is apparent not only in percentiles, but in returns to education. The education coefficient in log wage regressions is significantly higher in 2017 than it is in 1989…”
He uses several series as proxies for productivity, though he does note in terms of individuals, “It is virtually impossible to measure individual productivity except in some firm-based data where measures of output are readily available”For outside the US“…The productivity data are from the OECD Compendium of Productivity Indicators….”Where the “GDP per hour worked” series lives. For the US he uses BLS’s “Nonfarm Business Sector: Real Output Per Hour of All Persons” At the industry level for the US he uses data from The Division of Industry Productivity Studies (DIPS) in the Office of Productivity and Technology at the Bureau of Labor Statistics who have an industry series “Labor Productivity and Costs Measures” which has value added per hour in absolute terms and a productivity index.
Ed CommentOf course, we know the reason why—selection bias and genetics. Although I’m doubtful the denies ill ever admit it.