--- canonical_url: "https://csls.ca/ipm-archive/issue-4/the-importance-of-skills-for-innovation-and-productivity/" title: "The Importance of Skills for Innovation and Productivity" author: name: "CSLS" url: "https://csls.ca/author/cslc/" date_published: "2026-07-13T05:42:44+00:00" date_modified: "2026-07-13T06:38:14+00:00" post_type: "ipm" summary: "" ipm_issue_period: - "Spring 2002" ipm_keyword: - "Canada" - "Canada-US gap" - "firm-level data" - "human capital" - "innovation" - "labour productivity" - "manufacturing" - "productivity" - "R&D" - "skills" ipm_research_theme: - "Labour" - "Technology and innovation" ipm_country_focus: - "Canada" - "United States" featured_image: "https://csls.ca/wp-content/uploads/2026/06/IPM_50_banner.webp" status: "publish" --- # The Importance of Skills for Innovation and Productivity Canonical URL: https://csls.ca/ipm-archive/issue-4/the-importance-of-skills-for-innovation-and-productivity/ # The Importance of Skills for Innovation and Productivity [Download full PDF article](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-4-2-Rao-Tang-Wang.pdf) Cite this article × Cite this article as: Rao, Someshwar, Jianmin Tang, and Weimin Wang. 2002. “The Importance of Skills for Innovation and Productivity.” International Productivity Monitor, No. 4 (Spring 2002): 15–26. https://www.csls.ca/ipm-archive/issue-4/the-importance-of-skills-for-innovation-and-productivity/ ## Authors: - Someshwar Rao Innovation, Science and Economic Development Canada - Jianmin Tang Innovation, Science and Economic Development Canada - Weimin Wang Micro-Economic Policy Analysis Branch, Innovation, Science and Economic Development Canada ## IPM Issue 4 Spring 2002 pp. 15–26 ## Related IPM articles [The Relationship between Efficiencies Defenses for Mergers and TFP Growth Robin Shaban Fall 2025 | IPM Issue 49 | pp. 82–102](https://csls.ca/ipm-archive/ipm-issue-49/the-relationship-between-efficiencies-defenses-for-mergers-and-tfp-growth/) [Labour Productivity as a Measure of Technological Change Ulrich Kohli Fall 2025 | IPM Issue 49 | pp. 64–81](https://csls.ca/ipm-archive/ipm-issue-49/labour-productivity-as-a-measure-of-technological-change/) [Adult Skills and Productivity: New Evidence from PIAAC 2023 Dan Andrews, Balázs Égert, Christine de La Maisonneuve Fall 2025 | IPM Issue 49 | pp. 41–63](https://csls.ca/ipm-archive/ipm-issue-49/adult-skills-and-productivity-new-evidence-from-piaac-2023/) [Appendix: Variable Definitions and Country/Sector Coverage for Regulatory Reform Analysis Gilbert Cette, Jimmy Lopez, Giuseppe Nicoletti, Océane Vernerey Fall 2025 | IPM Issue 49 | pp. 1–18](https://csls.ca/ipm-archive/ipm-issue-49/appendix-variable-definitions-and-country-sector-coverage-for-regulatory-reform-analysis/) [The Potential Impact of Pro-competitive Regulatory Reforms on Productivity and Growth in Canada Gilbert Cette, Jimmy Lopez, Giuseppe Nicoletti, Océane Vernerey Fall 2025 | IPM Issue 49 | pp. 3–40](https://csls.ca/ipm-archive/ipm-issue-49/the-potential-impact-of-pro-competitive-regulatory-reforms-on-productivity-and-growth-in-canada/) [IPM Issue 49 Editors’ Overview Andrew Sharpe, Bart van Ark, Paul Schreyer Fall 2025 | IPM Issue 49 | pp. 1–2](https://csls.ca/ipm-archive/ipm-issue-49/) [De-industrialization and the Great Productivity Slowdown: What Comes Next? Paul Fisher Spring 2025 | IPM Issue 48 | pp. 115–138](https://csls.ca/ipm-archive/ipm-issue-48/de-industrialization-and-the-great-productivity-slowdown-what-comes-next/) [Appendix: UK Productivity Growth Rates Across Data Vintages and Studies Josh Martin Spring 2025 | IPM Issue 48 | pp. 65–73](https://csls.ca/ipm-archive/ipm-issue-48/appendix-uk-productivity-growth-rates-across-data-vintages-and-studies/) [Opportunities and Risks of Artificial Intelligence for Productivity Francesco Filippucci, Peter Gal, Katharina Laengle, Matthias Schief, Filiz Unsal Spring 2025 | IPM Issue 48 | pp. 1–26](https://csls.ca/ipm-archive/ipm-issue-48/opportunities-and-risks-of-artificial-intelligence-for-productivity/) [Using Ecosystem Accounting to Integrate the Environment in Measures of Multifactor Productivity Carl Obst Fall 2024 | IPM Issue 47 | pp. 87–108](https://csls.ca/ipm-archive/ipm-issue-47/using-ecosystem-accounting-to-integrate-the-environment-in-measures-of-multifactor-productivity/) ## Abstract ## Résumé EN FR Copy link Email LinkedIn This article examines the linkages between skills, innovation, and productivity in Canada using firm-level data for the manufacturing sector and panel data on two-digit manufacturing industries. Firm-level results indicate that companies hiring experienced employees and recent graduates perform significantly more process innovation. Industry-level analysis finds that labour productivity differences across manufacturing industries are positively associated with capital intensity, R&D intensity, and skills intensity. The article argues that closing Canada’s innovation and skills gaps relative to the United States is essential for narrowing the Canada-U.S. productivity and income gaps. Cet article examine les liens entre les compétences, l’innovation et la productivité au Canada à l’aide de données au niveau des entreprises pour le secteur manufacturier et de données de panel sur des industries manufacturières à deux chiffres. Les résultats au niveau des entreprises indiquent que les sociétés embauchant des employés expérimentés et de jeunes diplômés réalisent significativement plus d’innovation de procédés. L’analyse au niveau des industries révèle que les différences de productivité du travail dans les industries manufacturières sont positivement associées à l’intensité du capital, à l’intensité de la R-D et à l’intensité des compétences. L’article soutient que combler les écarts d’innovation et de compétences du Canada par rapport aux États-Unis est essentiel pour réduire les écarts de productivité et de revenu entre les deux pays. [Download full PDF](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-4-2-Rao-Tang-Wang.pdf)