Wages and Employment: The Role of Occupational Skills

42 Pages Posted: 2 Jul 2018

See all articles by Esther Mirjam Girsberger

Esther Mirjam Girsberger

University of Technology Sydney (UTS) - UTS Business School - Economics Discipline Group; IZA Institute of Labor Economics

Miriam Rinawi

Swiss National Bank

Matthias Krapf

University of Zurich

Multiple version iconThere are 2 versions of this paper

Abstract

How skills acquired in vocational education and training (VET) affect wages and employment is not clear. We develop and estimate a search and matching model for workers with a VET degree. Workers differ in interpersonal, cognitive and manual skills, while firms require and value different combinations of these skills. Assuming that match productivity exhibits worker-job complementarity, we estimate how interpersonal, cognitive and manual skills map into job offers, unemployment and wages. We find that firms value cognitive skills on average almost twice as much as interpersonal and manual skills, and they prize complementarity in cognitive and interpersonal skills. The average return to VET skills in hourly wages is 9%, similar to the returns to schooling. Furthermore, VET appears to improve labour market opportunities through higher job arrival rate and lower job destruction. Workers thus have large benefits from acquiring a VET degree.

Keywords: occupational training, vocational education, labor market search, sorting, multidimensional skills

JEL Classification: E24, J23, J24, J64

Suggested Citation

Girsberger, Esther Mirjam and Rinawi, Miriam and Krapf, Matthias, Wages and Employment: The Role of Occupational Skills. IZA Discussion Paper No. 11586. Available at SSRN: https://ssrn.com/abstract=3205853

Esther Mirjam Girsberger (Contact Author)

University of Technology Sydney (UTS) - UTS Business School - Economics Discipline Group

UTS Business School
14-28 Ultimo Rd
Ultimo, Ultimo 2007
Australia

IZA Institute of Labor Economics ( email )

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

Miriam Rinawi

Swiss National Bank

Research
Fraumuensterstr. 8
Zuerich, 8022
Switzerland

Matthias Krapf

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

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