The Complementary Effect of Organizational Practices and Workers' Type of Education

Abstract: This paper investigates the relationship between organizational practices and workers' type of education in affecting firms' productivity. Using Swiss firm-level panel data covering the period 1996-2015, I estimate complementarities among workers' type of education and a large set of organizational practices which are aggregated to three domains: decentralization, incentive pay, and work design - where work design comprehends job rotation, teamwork, and hierarchical layers. I consider workers with four types of education: no post-compulsory education, upper secondary vocational education and training, tertiary professional education, and tertiary academic education. The results indicate that the complementarity between the extent of firms' decentralization and education is similar for workers with no post-compulsory education and workers with an upper secondary vocational education and training, while complementarity is higher for tertiary educated workers. In contrast, the estimations reveal no complementarity between incentive pay schemes and higher level of workers' education. Finally, the results indicate complementarity between work design and tertiary educated workers, both professional and academic ones.