Education, Labour Market Experience and Cognitive Skills: Evidence from PIAAC

42 Pages Posted: 18 Jan 2017

See all articles by Juan F. Jimeno

Juan F. Jimeno

Banco de España - Research Department; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Aitor Lacuesta

Banco de España

Marta Martinez-Matute

Banco de España

Ernesto Villanueva

Banco de España - Research Department

Date Written: 2016

Abstract

We study how formal education and experience in the labour market correlate with measures of human capital available in thirteen countries participating in the Program for the International Assessment of Adult Competences (PIAAC), an international study assessing adults’ proficiency in numeracy and literacy. Two findings are consistent with the notion that, in producing human capital, work experience is a substitute for formal education for respondents with compulsory schooling. Firstly, the number of years of working experience correlates with performance in PIAAC mostly among low-educated individuals. Secondly, individual fixed-effect models suggest that workers in jobs intensive in numerical tasks – relative to reading tasks – perform relatively better in the numeracy section of the PIAAC test than in the reading part. The results are driven by young individuals with low levels of schooling and hold mainly for simple tasks, suggesting that our findings are not fully generated by the sorting of workers across jobs. A back-of-the-envelope estimate suggests that the contribution of on-the-job learning to skill formation is a quarter of that of compulsory schooling in the countries we analyse.

Keywords: human capital, tasks, education, working experience, cognitive skills

JEL Classification: J24, J31, I20

Suggested Citation

Jimeno, Juan F. and Lacuesta, Aitor and Martinez-Matute, Marta and Villanueva, Ernesto, Education, Labour Market Experience and Cognitive Skills: Evidence from PIAAC (2016). Banco de Espana Working Paper No. 1635. Available at SSRN: https://ssrn.com/abstract=2901354 or http://dx.doi.org/10.2139/ssrn.2901354

Juan F. Jimeno (Contact Author)

Banco de España - Research Department ( email )

Alcala 48
28014 Madrid
Spain

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Aitor Lacuesta

Banco de España ( email )

Madrid 28014
Spain

Marta Martinez-Matute

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Ernesto Villanueva

Banco de España - Research Department ( email )

Alcala 50
28014 Madrid
Spain

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