Skill mismatch and the dynamics of Italian companies’ productivity

This work explores the relationship between labour productivity and skill (mis) match relying on a unique database integrating information at both the firm and the worker level. The analysis is based on a novel skill match indicator providing actual and qualitatively detailed information on the demand/supply of skills. Focusing on a sample of Italian limited liability companies observed during 2012, 2014 and 2017, we show that the ability to match their skills need via new hires is always positively correlated to companies’ labour productivity. This result is robust to the inclusion of variables accounting for sectoral-level training intensity, firm-level recruitment behaviour, a capillary set of firm-level controls and across size classes.