The Value of Nascent Skills for Employability in Peru

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. Informing Human Development: ESW Fair. Wednesday. , . January 12, 2011. Motivation and Questions. . Why focus on multiple skills? . (Beside schooling). Which skills matter most for employability in Peru? . ID: 545467 Download Presentation

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The Value of Nascent Skills for Employability in Peru




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Presentations text content in The Value of Nascent Skills for Employability in Peru

Slide1

The Value of Nascent Skills for Employability in Peru

Informing Human Development: ESW Fair

Wednesday

,

January 12, 2011

Slide2

Motivation and Questions

Why focus on multiple skills?

(Beside schooling)

Which skills matter most for employability in Peru?

(New Skills & Labor Survey)

How can they be developed through public intervention?

(What it means for the Bank)

Slide3

3

Why multiple skills? Peruvian employers want both cognitive and socio-emotional skills

Corroborated by data from ICA surveys, public job intermediation service, qualitative study/interviews of larger firms (similar to OECD, other MICs)

~=40%

Non-cognitive

Employers’ reported problems to hire suitable workers

(% responses)

Employers’ reported factors considered always/frequently to assess workers suitability

(% responses)

Source: Peru Firm Informality Survey 2007, N=804 firms,1-50 employees

Slide4

Which skills matter most for employability in Peru?:

Learning from a New Labor Skills Survey

Slide5

Measuring Skills and Employability

Developed over 1+ year (DECRG grant), interdisciplinary team

Representative of main urban areas (n=2,666 HHs) and regions. Built on national HH survey, supplemented by modules on:

Employability

outcomes (employment, earnings, job satisfaction)

Labor insertion, educational trajectories, family background

Skills

: Cognitive (receptive language, verbal fluency, working memory, numeracy-problem solving) and socio-emotional (Big-5 Personality Factors, GRIT)

Big-five

: wide consensus that personality traits cluster into five factors:

O

penness to experience;

C

onscientiousness;

E

xtraversion;

A

greeableness;

N

euroticism (inverse of emotional stability)

GRIT

: Narrower trait “

perseverance

(duration of effort) & passion for long-term goals (

consistency of interest

)”

(Duckworth et al 2007)

Strong predictor of high achievement in US (over cognitive ability)

Slide6

6

While interrelated, these skills capture distinct dimensions of human capacity/motivation

Cognitive skills more highly interrelated (‘G’ IQ), socio-emotional less soOECD evidence of causal connection behind correlations (Heckman et al)

Correlation between socio-emotional test scores

Correlation

between

cognitive

test scores

Slide7

Which skills matter most for employability in Peru?:

Earnings returns to skills and schooling

Slide8

Cognitive and socio-emotional skills correlate significantly with earnings

W

hen assessed individually

without

controlling for schooling

(

yes, parental education, demographics)

, workers scoring 1 std dev higher in

these

skills earn more:

10 percent (working memory, verbal fluency) to 18 percent (receptive language, numeracy)

8 percent (Big-five emotional stability, openness to experience, extraversion) to 13 percent (Grit-perseverance )

Those scoring higher in agreeableness (facet cooperation) have 5 percent

lower

earnings (found in U.S too!)

Slide9

These correlations reflect direct earnings returns besides years of schooling

VARIABLES

Coefficients from 2-step IV Mincer regression

Years of schooling

0.069***

Overall

cog ability

0.094***

Extraversion

0.056

Agreeableness-kindness

-

0.044

Agreeableness-cooperation

-

0.080***

Conscientiousness

-

0.027

Emotional Stability

0.049**

Openness

-

0.002

GRIT

consistency of interest

-

0.002

GRIT

perseverance

of

effort

0.090*

Dep. variable: Log (hourly earnings)

Coefficients from two-steps Mincer regression. 1

st

step regresses cognitive ability and

instruments

education to compute cognitive ability

residualized

from education,

which is then used in

2

nd

step (Hansen, Heckman & Mullen 2004)

. C

ontrol variables: work exp. and square, gender, ethnic group, zone of residence, parental background. Personal traits in z-scores. t-statistics in brackets. *** p<0.01, ** p<0.05, * p<0.1. N=1,142.

R-squared= 0.20

Slide10

Cognitive and socio-emotional skills give comparable advantage in life-time earnings, though below college credentials

Advantage from higher cognitive ability comparable to some socio-emotional skills

Both can compensate for low schooling

Education produces largest earnings inequality – college educated have biggest advantage

Note: Simulations of age-earnings profiles over work life (graduation-65 yrs retirement) for typical workers using Mincer regression parameters (discount rate 5%)

Slide11

Which skills matter most for employability in Peru?:

skills



schooling

Slide12

Skills beget skills: Cognitive ability strong predictor of educational achievement

Holds controlling for host of confounding factors. OECD evidence of two-way causal connection

Distribution

of

Summary

cognitive

scores

by

education

level

Slide13

Skills beget skills: Socio-emotional skills also predict educational achievement, though less so

Holds controlling for host of confounding factors. OECD evidence of two-way causal connection

Distribution

of GRIT scores

by

education

level

Slide14

Cognitive and socio-emotional skills appear more binding for college access than financial constraints

Note: Simulations from bivariate probit regressions: Eq1: 1= pursued tertiary education, 0=otherwise; Eq2: 1= enrolled in college, 0= enrolled in technical/non-university. Controls for individual and family factors such as gender, ethnic group, parental/family background, reported SES and scholastic performance during secondary schooling and. Wald test of indep. Eqns: Prob > chi2 = 0.0063

Change

in

probability

of

tertiary

education

enrollment

Slide15

Recapping the Evidence

Schooling (content + credentials) and cognitive and socio-emotional skills are all very valued in the Peruvian labor market

Significant gaps in these skills between working-age of better-off and worse-off families

Timely development of cognitive and socio-emotional skills and improved educational achievement go together, and are essential to a more competitive and equitable Peru

Slide16

How can these skills be developed through public intervention?

What does it mean for the Bank?

Slide17

Science and Policy Evaluation gives ample room for Cost-effective Public Intervention

“Nature”

vs

“Nurture” separation obsolete

: Heritability + family influences interact, both matter

Different sensitive periods: Socio-emotional skills more malleable through adolescence/early 20s

With adequate support, good parenting and schools can develop cognitive and socio-emotional skills

(

Durlak

et al;

Heckhman

& Cunha;

Sankoff

et al; WB ECD studies)

:

“Tools of the Mind” improve pre-school children’s self-control. Universal school-based interventions (K - high-school), youth mentoring (Big Brother/Sister) & training improve Big-five-related skills

Early investments to compensate initial disadvantage can be

costly, but

also

yield

high

returns

Slide18

What does it mean for the Bank?

Help redefine

what it takes to be a

well-educated person in the 21

st

Century

Cognitive and socio-emotional skills determine a person’s “readiness to learn” through the life cycle

Numeracy, literacy and academic qualifications a core but not the only output of education systems. Curricula, learning standards and pedagogic practice should also take socio-emotional skills seriously

Expand policy research

(already happening)

to underscore evidence base of links between early HD investments

(maternal, child nutrition & health, ECD)

& employability skills

Issue

:

intangibility and long maturity of investments

vis-à-vis short political horizons

– better

outreach, broader

social consensus

building (Peru video)

Learn from and build capacity to adapt successful interventions

(expertise

on

developmental, education

psychology)

Slide19

Thank you!


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