Paper Session 7A: Returns to education
IT Skills, Occupation Specificity and Job Separations
University of Zurich, Switzerland
This paper examines how workers’ earnings change after involuntary job separations depending on the workers’ acquired IT skills and the specificity of their occupational training. We categorize workers’ occupational skill bundles along two independent dimensions. First, we distinguish between skill bundles that are more specific or less specific compared to the skill bundles needed in the overall labor market. Second, as digitalization becomes ever more important, we distinguish between skill bundles that contain two different types of IT skills, generic- or expert ones. We expect that after involuntary separations, these IT skills can have opposing effects, either reducing or amplifying earnings losses of workers with specific skill bundles. We find clearly opposing results for these two types of IT skills for workers in specific—but not in general—occupations: Having more generic IT skills is positively correlated with earnings after involuntary separations, whereas more expert IT skills are negatively correlated.
Do wage scarring effects depend on the type of workers’ skills?
1Swiss Federal University for Vocational Education and Training SFUVET, Switzerland; 2University of Bern
Unemployment episodes and economic recession can have detrimental effects on individuals’ wages after reemployment. Previous research has shown that these negative effects are especially severe for blue collar workers and workers with a low education level. A possible explanation is that highly educated workers and those in white collar occupations have more general skills, which are highly transferable, while less educated workers or workers in blue collar occupations have more specific skills, which are less transferable between jobs and occupations. However, existing studies do not consider the heterogeneity of skill acquisition within education levels. Education programmes differ greatly regarding the amount of general and specific skills they impart. Using upper secondary vocational education and training (VET) programmes as an example, we therefore investigate whether different types of general and specific skills imparted during training moderate the effect of unemployment and low labour demand on income. We apply an institutional approach, assuming that differences between training occupations influence diploma holders’ human capital development. Furthermore, we draw upon human capital theory, which argues that general skills are more transferable and depreciate more slowly than specific skills. Diploma holders with general skills can retain a high productivity level even if they enter a job in a different occupational field, which is more likely to occur after unemployment episodes or when jobs in their field are scarce. Therefore, they are likely to have less severe earnings losses than individuals with more specific skills. Our analysis is based on a sample of Swiss employees with upper secondary VET, combined with skill measures derived from occupation-specific training curricula. We address causality issues, including potential selection and endogeneity problems, by applying an endogenous treatment effects model. The results show that general education and training attenuate the negative effect of low occupation-specific labour demand on wages.
How IT progress affects specialization and social skills in the labor market
University of Zurich, Switzerland
We study how information technology (IT) progress affects specialization and social skills by developing a theoretical model and empirically analyzing its implications. Our model shows how IT progress can, but does not have to, lead to increasing returns to specialization and social skills. Using rich skill data from Swiss occupational training curricula, we empirically investigate the wage returns to specialization and social skills depending on IT progress. Our individual fixed-effects analyses show that IT progress leads to increasing wage returns for specialized workers. Furthermore, our results suggest that workers with high social skills benefit from IT progress only if they are also specialized.
The impact of a missing school graduation cohort on hiring trainees and training wages
Hochschule der Bundesagentur für Arbeit, Germany
This study analyzes the effects of a missing high school graduation cohort on the number of trainees that are hired by firms and on the wages of trainees. The canonical labor market model predicts that such a decrease in the supply of trainees should have an effect on hiring and wages. The missing cohort was caused by an exogenous school reform varying at the state and year level. Using administrative social security data on all trainees and training firms in Germany, we show that firms provide less training by reducing their overall number of hired apprentices. We also show that the pool of firms that offer training in the year of the missing cohort shifts towards a higher share of low wage firms. After keeping firm characteristics constant, the findings indicate that the missing cohort increases training wages measured at the start of training. Further analyses shed light on the opposite case of a dual cohort, which we find to increase training provision and to decrease training wages. The evidence also suggests that high and low wage firms differ in how they adjust training provision in response to a dual cohort.