Cognitive Skills Matter: The Employment Disadvantage of Low-Educated Workers in Comparative Perspective

Abstract

It is now a widely acknowledged fact that the low-educated workers are facing important risks of labour market exclusion in modern economies. However, possessing low levels of educational qualifications leads to very different situations from one country to another, as the cross-national variation in the unemployment rates of these workers attest. While conventional wisdom usually blames welfare states and the resulting rigidity of labour markets for the low employment opportunities of low-educated workers, empirical evidence tends to contradict this predominant view. Using microdata from the International Adult Literacy Survey that was conducted between 1994 and 1998, we examine the sources of the cross-national variation in the employment disadvantage of low-educated workers in 14 industrialized nations. In particular, we test the validity of the conventional theories concerning the supposedly harmful effect of labour market regulation against a new and promising hypothesis on the importance of cognitive skills for the employment opportunities of the low-educated workers. Our findings support the latter and suggest that the greater the cognitive gap between the low-educated workers and those with intermediate education, the lower the chances of being employed for the former relatively to their higher educated counterparts.

Human capital or signaling? Differences in skills distributions and the labor market disadvantage of less-educated adults across 21 countries

“…We account for this possibility in two ways. First, we do not analyze labor market disadvantage in terms of unemployment or nonemployment risks (the outcome studied by Abrassart 2013). Instead, we focus on occupational status in the current or last job, which should be less sensitive to business cycle or economic downturn effects.…”

“…In particular, many studies show that less-educated adults, that is, adults who did not complete upper-secondary education, bear the highest risk of labor market marginalization in all advanced economies (e.g., Abrassart 2013;Gesthuizen, Solga, and Künster 2011). This disadvantage results in elevated poverty risks (e.g., Green, Preston, and Janmaat 2006), which is one of the reasons why the "social investment state" approach (Giddens 2000) seeks to combat poverty by improving the employment opportunities of poor adults rather than through social transfers (e.g., Crouch, Finegold, and Sako 1999;Solga 2014).…”

“…This disadvantage results in elevated poverty risks (e.g., Green, Preston, and Janmaat 2006), which is one of the reasons why the "social investment state" approach (Giddens 2000) seeks to combat poverty by improving the employment opportunities of poor adults rather than through social transfers (e.g., Crouch, Finegold, and Sako 1999;Solga 2014). The precise extent of less-educated adults' labor market disadvantage differs considerably across countries, however (Abrassart 2013;Andersen and Van de Werfhorst 2010;Bol and Van de Werfhorst 2011;Gesthuizen, Solga, and Künster 2011;Shavit and Müller 1998). A better understanding of these country differences is important for designing policies that effectively improve the employment opportunities of less-educated adults and thereby reduce their poverty risks.…”

“…This productivity disadvantage translates into lower wages and occupational attainment and higher unemployment (e.g., Abrassart 2013;Murnane, Willett, and Levy 1995). A second account, the signaling explanation, emphasizes the role of educational credentials as easy-to-observe proxies for skills and productivity.…”

Achterstanden van niet-westerse immigranten op de arbeidsmarkt onder hoger opgeleide toetreders

“…Echter, prefereren wij hier een tweestaps multiniveau aanpak (zie ook : Reimer et. Al, 2008;Gebel & Giesecke, 2011;Abrassart, 2013). Tweestaps multiniveaumodellen krijgen hier om meerdere redenen de voorkeur.…”