Coping with Change: International Differences in the Returns to Skills

Abstract

Expanded international data from the PIAAC survey of adult skills allow us to analyze potential sources of the cross-country variation of comparably estimated labor-market returns to skills in a more diverse set of 32 countries. Returns to skills are systematically larger in countries that have grown faster in the recent past, consistent with models where skills are particularly important for adaptation to dynamic economic change.

Addressing Cross-National Generalizability in Educational Impact Evaluation

“…One of the first real tests of that hypothesis comes from comparing the rates of return to cognitive skills with the annual growth rate in GDP. Indeed, the faster the growth rate in GDP, where presumably jobs are changing more rapidly, the higher the return to skills (Hanushek, Schwerdt, Wiederhold, and Woessmann (2017)).…”

“…15 The most obvious result is that these returns vary widely -from 11 percent higher wages for one standard deviation higher math scores in Greece to 45 percent in Singapore. The U.S. has returns of 25 percent for one standard deviation higher math scores (Hanushek, Schwerdt, Wiederhold, and Woessmann (2017)).…”

“…a Jakarta only. Source:Hanushek, Schwerdt, Wiederhold, and Woessmann (2017) higher earnings for teachers given their test scores, experience level, and gender. Source:Hanushek, Piopiunik, and Wiederhold (forthcoming) 23 Life-cycle Employment Rates by Education Type for Apprenticeship Countries…”

Gulf Economic Monitor, Issue 4

“…40 Automation is reshaping work, shifting the demand for skills from narrow, job-specific, routine manual skills to advanced cognitive and socio-behavioral skills. 41,42,43,44 Skills associated with "adaptability" are increasingly in demand. This combination of specific cognitive skills (critical thinking and problem-solving) and socio-behavioral skills (creativity and curiosity) is transferable across jobs.…”

Adapting to the changing labour market in New Zealand

“…Workers with stronger information-processing skills are better able to adapt to change. Using past average growth in real GDP per capita as a measure of the pace of economic change, Hanushek et al (2016) find that returns to information-processing skills (represented by numeracy skills) are higher when there is more rapid economic change. They estimate that a one standard deviation increase in numeracy skills is associated with 19% higher earnings in New Zealand, slightly below the pooled estimate for the 32 countries in PIAAC ( Figure 14).…”