Details

Autor(en) / Beteiligte

• Hanushek, Eric A
• Schwerdt, Guido
• Wiederhold, Simon
• Woessmann, Ludger

Titel

Returns to skills around the world: Evidence from PIAAC

Ist Teil von

• European economic review, 2015, Vol.73 (73), p.103-130

Ort / Verlag

Amsterdam: Elsevier B.V

Erscheinungsjahr

2015

Quelle

Alma/SFX Local Collection

Beschreibungen/Notizen

• Existing estimates of the labor-market returns to human capital give a distorted picture of the role of skills across different economies. International comparisons of earnings analyses rely almost exclusively on school attainment measures of human capital, and evidence incorporating direct measures of cognitive skills is mostly restricted to early-career workers in the United States. Analysis of the new PIAAC survey of adult skills over the full lifecycle in 23 countries shows that the focus on early-career earnings leads to underestimating the lifetime returns to skills by about one quarter. On average, a one-standard-deviation increase in numeracy skills is associated with an 18 percent wage increase among prime-age workers. But this masks considerable heterogeneity across countries. Eight countries, including all Nordic countries, have returns between 12 and 15 percent, while six are above 21 percent with the largest return being 28 percent in the United States. Estimates are remarkably robust to different earnings and skill measures, additional controls, and various subgroups. Instrumental-variable models that use skill variation stemming from school attainment, parental education, or compulsory-schooling laws provide even higher estimates. Intriguingly, returns to skills are systematically lower in countries with higher union density, stricter employment protection, and larger public-sector shares. •Returns to cognitive skills differ significantly across 23 sampled OECD countries.•Labor market returns to cognitive skills are twice as large in the US as in Italy.•Early career returns to cognitive skills grow 30 percent by prime working age.•Returns to cognitive skills are insignificantly different for males and females.•Lower returns are associated with higher union density and larger public sectors.•IV estimates point to a causal interpretation.