Wage growth of less educated workers: the importance of social skills

Abstract We use matched employee–employer data from the UK to investigate the importance of social skills – in particular, teamwork and communication with co‐workers – as a driver of wage growth for workers with lower formal education. We find that in social skill tasks, a significant fraction of less educated workers enjoy wage progression with tenure, and higher returns in firms with more educated co‐workers. We rationalise these dynamics through a model in which social skills – initially opaque to both employee and employer – are learned about over time through complementarity with co‐workers.