The Value of Transferable Skills

Date01 September 2015
DOIhttp://doi.org/10.1111/sjpe.12079
Published date01 September 2015
THE VALUE OF TRANSFERABLE
SKILLS
Francesca Sgobbi* and F
atima Suleman**
ABSTRACT
Most studies on skill transferability focus on the return to capabilities developed
in the initial job and disregard the different characteristics of the origin and the
destination industries. In contrast, this article assesses the borders of skill trans-
ferability by comparing the return to skills for firm stayers, firm changers in the
same industry, and firm changers to other industries. Based on a sample of Por-
tuguese employees in retail banking, our results confirm significant inter-firm
and inter-industry skill transferability. Difference-in-differences estimates with
propensity score matching show that firm switchers benefit from a wage premium
compared to firm stayers. However, the wage premium drops sharply when mov-
ers leave the banking sector.
II
NTRODUCTION
Over the past decades, human capital theory has played an important role in
our understanding of the wage premium attached to specific types of skill
(Becker, 1964). Depending on skill fungibility, human capital theory discrimi-
nates among general skills, useful in virtually all workplaces, and specific
skills, required by selected employers only. The opposition between general
skills and specific skills provided support for models of the labor market that
long affected theoretical and empirical research, such as internal labor markets
(Doeringer and Piore, 1971) or labor market signaling (Spence, 1973). Never-
theless, a radical contrast between general and specific skills has been repeat-
edly questioned in more recent years. Since the initial acknowledgement of an
intermediate category of transferable skills between firm-specific and general
skills (Shaw, 1987; Stevens, 1996), researchers have highlighted the role played
by industry-specific skills (Neal, 1995; Parent, 2000), occupation-specific skills
(Shaw, 1987; Poletaev and Robinson, 2008; Zangelidis, 2008; Kambourov and
Manovskii, 2009; Sullivan, 2010), and task-specific skills (Gathmann and
Sch
onberg, 2010).
This literature supports the existence of non-negligible although heteroge-
neous returns to industry-specific experience that significantly overlap and
*DIMI, University of Brescia
**Instituto Universit
ario de Lisboa (ISCTE-IUL), DIN^
AMIA’CET-IUL
Scottish Journal of Political Economy, DOI: 10.1111/sjpe.12079, Vol. 62, No. 4, September 2015
©2015 Scottish Economic Society.
378
interact with occupation-specific and task-specific experience. However, the
large majority of the studies on skill transferability across firms and industries
focus on the return to capabilities developed in the initial job and disregard
how the different characteristics of the origin and the destination industries
may constrain the transferability of an employee’s skills and impact her/his
wage. In contrast, this article aims to assess the borders of skill transferability
by comparing the return to skills for firm stayers, firm changers in the same
industry, and firm changers to other industries.
The sector-specific empirical analysis provided in this article focuses on the
retail banking industry, which was highly regulated in the past (Eriksson and
Werwatz, 2005; Seltzer, 2010) and more recently exposed to intense institu-
tional, technological and organizational change (Hunter et al., 2001). The
accelerated industrial dynamics, characterized by new entries, mergers and
acquisitions, and the digitalization of information flows, involving both com-
petence-enhancing and competence-destroying change, highlight the impor-
tance of skill transferability for the long-term employability of the labor force
in retail banking. In addition, evidence on the return to industry-specific skills
in retail banking is mixed and calls for further investigation. For instance,
Kletzer (1996) supports the transferability of the skills developed in finance
and services by showing that pre-displacement tenure from these sectors
involves a higher return than tenure accumulated in other sectors. On the
other hand, Zangelidis (2008) provides evidence in support of skill specificity
by reporting banking and finance as the only sector that recognizes a signifi-
cant wage premium for industry-specific experience.
Our empirical analysis is based on Quadros de Pessoal, a longitudinal
archive of linked employeremployee data on the Portuguese labor market
that allows an employee’s career across years and across subsequent employ-
ers to be tracked. Difference-in-differences estimates with propensity score
matching on retail banking white collar workers show that, on average, firm
switchers benefit more from a wage premium than firm stayers. However, the
wage premium drops sharply when movers leave the banking sector. The rest
of the article is organized as follows. Section II surveys the literature on trans-
ferable skills and details our research hypothesis. Section III outlines our
empirical strategy and section IV presents the data. Section V reports the
empirical evidence and section VI draws our conclusions from this study.
II THE RETURN TO TRANSFERABLE SKILLS
While there is agreement on the general meaning of transferable skills among
scholars, significant differences arise in operational definitions. Stevens (1996)
frames transferable skills as an intermediate category between general and spe-
cific skills whose applicability goes beyond the borders of the firm, although it
is restricted to a limited cluster of employers. Sullivan (2010) recalls Becker’s
dichotomy of completely general vs. specific skills, yet he discriminates among
firm-specific, occupation-specific, and industry-specific skills. Kletzer (1996)
refers to industry-specific skills as a special form of transferable skills.
THE VALUE OF TRANSFERABLE SKILLS 379
Scottish Journal of Political Economy
©2015 Scottish Economic Society

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