Seminar – Fewer & Less Skilled? Human Capital, Competition & Entrepreneurial Success in Manufacturing

Professor Vojislav Maksimovic, University of Maryland

We use micro data on skill levels of establishments to examine the human capital of US manufacturing entrepreneurial and incumbent plants over the period 2005-2013. We find a large drop in the cognitive skill levels of the entrepreneurial work force over this period. This has serious long-term implications since initial cognitive skills at the establishment level predict future skills and growth rates. While there is a differential decline in entrant skills in industries exposed to Chinese imports, we also find that incumbents upgrade skill levels in exposed industries. High skilled incumbents grow faster than low skilled establishments in exposed industries. The evidence for entrants is weaker, suggesting that they are entering in niches appropriate to their skill sets. The economic effect of import competition on the differential in skills between entrants and incumbents is economically significant explaining between 17 to 60 per cent of the skill differential in 2011. Overall, we find that entrepreneurial firms and incumbents are acquiring different skill sets, leaving entrants more exposed to the risk of automation or offshoring.

Speaker bio

“Max” Maksimovic is the William A. Longbrake Chair in Finance & Professor of Finance. His recent research focuses on how a firm’s organisational structure affects the flow of resources across its divisions. He has also worked on how competition in high technology industries determines the timing of initial public offerings. Maksimovic is interested in international finance, specifically in how a country’s legal and institutional environment influences the financing and investment by firms. Maksimovic’s research has been published in the Journal of Finance, Review of Financial Studies, RAND Journal of Economics, Journal of Financial Economics, and Journal of Financial and Quantitative Analysis. He is an associate editor of Journal of Financial Intermediations and a past member of the board of directors of the Western Finance Association.