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Keywords:

  • J24;
  • L25
  • Human capital;
  • firm productivity;
  • employee characteristics;
  • municipal attributes;
  • multilevel model

Abstract

This paper analyses the importance of human capital for firm productivity and makes a clear distinction between the role of human capital inside and outside of the firm. A multilevel model is used for the business service sector in Sweden controlling for heterogeneity across the industry and municipal level. Human capital in firms in terms of education, experience, and cognitive skills and the firm's overall access to human capital has a positive impact on firm productivity. In addition, firm attributes explain the largest proportion of firm productivity variance.