Returns to skills around the world: Evidence from PIAAC

Hanushek, Eric A.; Schwerdt, Guido; Wiederhold, Simon; Woessmann, Ludger

doi:10.1016/j.euroecorev.2014.10.006

Cited by 526 publications

(556 citation statements)

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“…Moreover, the returns to skill as measured by the OECD Survey of Adult Skills (OECDc) are lowest in the Nordic countries and highest in the Anglo-American countries (Hanushek et al 2013: 38). The correlation coefficient for returns to skills in the Hanushek et al (2013) study and the top 1% share is .69. Thus, it is a plausible interpretation that center and right government leads to less public education spending, more private tertiary education spending, more stratification among those who have tertiary education, thus to higher returns to skill and finally to higher top income shares.…”

Section: Figure 3 Estimated Effect Of a Two Standard Deviation Changementioning

confidence: 94%

Power, Markets, and Top Income Shares

Huber¹,

Huo

Stephens³

2015

SSRN Journal

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The Kellogg Institute for International Studies at the University of Notre Dame has built an international reputation by bringing the best of interdisciplinary scholarly inquiry to bear on democratization, human development, and other research themes relevant to contemporary societies around the world.Together, more than 100 faculty and visiting fellows as well as both graduate and undergraduate students make up the Kellogg community of scholars. Founded in 1982, the Institute promotes research, provides students with exceptional educational opportunities, and builds linkages across campus and around the world. The Kellogg Working Paper Series:! Shares work-in-progress in a timely way before final publication in scholarly books and journals ABSTRACTThe rise of the super-rich has attracted much political and academic attention in recent years. However, to date there have been few attempts to explain the cross-national variation in the recent rise of very top incomes. Drawing on the World Top Incomes Database, we study the income share of the top 1% in almost all current postindustrial democracies from 1975 to 2012. We find that extreme income concentration at the very top is a predominantly political phenomenon, not the outcome of economic changes. Top income shares are largely unrelated to economic growth, increased knowledge-intensive production, export competitiveness, market size, financialization, and wealth accumulation. Instead, they are driven by various political and policy changes that reflect a decline in the relative power and resources of labor, such as union density and centralization, secular-right governments, and cuts in top marginal income tax rates as well as in public spending on education. RESUMENEn los últimos años, el ascenso de los super-ricos atrajo mucha atención política y académica. Sin embargo, hasta el momento se hicieron pocos intentos de explicar la variación internacional en el crecimiento reciente de los ingresos más altos. Tomando información de la Base Mundial de Datos sobre los Ingresos más Altos (World Top Incomes Database) estudiamos la porción del ingreso del 1% superior en casi todas las democracias postindustriales actuales desde 1975 hasta 2012. Encontramos que la extrema concentración del ingreso en la cúspide es un fenómeno predominantemente político y no resulta de cambios económicos. La participación de los ingresos superiores no está relacionada en ninguna medida significativa con el crecimiento económico, un aumento en la producción que hace un uso intensivo del conocimiento, la competitividad de las exportaciones, el tamaño de los mercados, el desarrollo del sector financiero o la acumulación de riqueza. En cambio, está guiada por varios cambios en la política y en las políticas que reflejan una declinación en el poder relativo y en los recursos de los trabajadores, tales como la densidad sindical y la centralización, los gobiernos seculares de derechas y las reducciones tanto en las tasas marginales superiores de impuestos sobre los ingresos como en el gasto púb...

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Section: Figure 3 Estimated Effect Of a Two Standard Deviation Changementioning

confidence: 94%

Power, Markets, and Top Income Shares

Huber¹,

Huo

Stephens³

2015

SSRN Journal

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“…In a recent article, Hanushek et al (2015) use data from the PIAAC database to study the relationship between human capital and individual earnings. They show that PIAAC scores have explanatory power on earnings above and beyond years of schooling (the traditional measure of human capital).…”

Section: Introductionmentioning

confidence: 99%

“…However, as emphasized in the psychology field (Wechsler 1940) and in the economics literature Segal 2012) performance on achievement tests depends not only on cognitive but also on non-cognitive skills. 3 Therefore, it is not clear until what extent the association between PIAAC scores and earnings found by Hanushek et al (2015) is driven by cognitive or non-cognitive factors. In other words, interpreting the results of Hanushek et al (2015) in terms of cognitive skills may be problematic.…”

Section: Introductionmentioning

confidence: 99%

“…3 Therefore, it is not clear until what extent the association between PIAAC scores and earnings found by Hanushek et al (2015) is driven by cognitive or non-cognitive factors. In other words, interpreting the results of Hanushek et al (2015) in terms of cognitive skills may be problematic. We propose a correction of the PIAAC test scores using our proxies for non-cognitive skills.…”

Section: Introductionmentioning

confidence: 99%

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Non-cognitive skills and individual earnings: new evidence from PIAAC

Anghel

Balart

2017

SERIEs

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We use the Programme for the International Assessment of Adult Competencies (PIAAC) data to construct several measures of non-cognitive skills and to analyze the relationship between non-cognitive skills and earnings. We construct measures for non-cognitive skills based on previous research in the field, such as selfreports and non-response in the background questionnaire. We also take advantage of the computer based nature of the assessment to explore the effects of other constructs such as skipped questions in the test, average time per question, average time per correct answer and the number of keyboard and mouse movements before answering a question. We find that, even after controlling for PIAAC scores, previously proposed proxies of non-cognitive skills (self-reports and survey non-response) are significantly associated with individual earnings. We also use these measures of non-cognitive skills to propose a correction of the PIAAC scores as a measure of cognitive skills in the earnings equation. By doing so, we observe that the relationship between earnings and PIAAC scores might be partially mediated by non-cognitive skills. However, our results also show that PIAAC test scores remain highly significant and as the main determinant of earnings after the correction.

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“…Pioneering initiatives, such as the International Adult Literacy Survey (IALS) and the Programme for the International Assessment of Adult Competencies (PIAAC), have led to the conclusion that there are differences across countries in terms of a range of skills, which are not captured by looking at years of education. These new measures have shown to be helpful in explaining cross-country differences in labour-market outcomes and economic performance (e.g., Leuven et al 2004;Hanushek et al 2015). One of the main lessons from these studies is that the link between human-capital indicators and economic performance and the link between individual abilities and outcomes (such as employment opportunities and wages) is far from automatic (e.g., Acemoglu and Autor 2011 for a review).…”

Section: Introductionmentioning

confidence: 99%