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Cognitive and non-cognitive skills for the Peruvian labor market : addressing measurement error through latent skills estimations

Author

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  • Cunningham,Wendy
  • Parra Torrado,Mónica
  • Sarzosa,Miguel Alonso

Abstract

Evidence from developed country data suggests that cognitive and non-cognitive skills contribute to improved labor market outcomes. This paper tests this hypothesis in a developing country by using an individual-level data set from Peru that incorporates modules to measure cognitive and non-cognitive skills. The paper estimates a structural latent model with unobserved heterogeneity to capture full ability rather than just measured skill. It also applies standard ordinary least squares techniques for comparison. The analysis confirms that cognitive and non-cognitive skills are positively correlated with a range of labor market outcomes in Peru. In particular, cognitive skills positively correlate with wages and the probability of being a wage worker, white-collar, and formal worker, with verbal fluency and numeric ability playing particularly strong roles. The results are robust to methodology. The patterns are less uniform for non-cognitive skills. For instance, perseverance of effort (grit) emerges strongly for most outcomes regardless of methodology. However, plasticity?an aggregation of openness to experience and emotional stability?is only correlated with employment, and only when using the structural latent model. The ordinary least squares method also finds that the disaggregated non-cognitive skills of kindness, cooperation, emotional stability, and openness to experience emerge significantly, mostly for the wage estimates. The different results derived from the ordinary least squares and the structural model with latent skills suggest strong measurement bias in most non-cognitive skills measurement. These findings, although only correlational because of the use of a single cross-section, suggest that recent efforts by the Peruvian government to incorporate non-cognitive skill development into the school curriculum are justified.

Suggested Citation

  • Cunningham,Wendy & Parra Torrado,Mónica & Sarzosa,Miguel Alonso, 2016. "Cognitive and non-cognitive skills for the Peruvian labor market : addressing measurement error through latent skills estimations," Policy Research Working Paper Series 7550, The World Bank.
  • Handle: RePEc:wbk:wbrwps:7550
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    Cited by:

    1. Yoonyoung Cho & Zaineb Majoka, 2020. "Pakistan Jobs Diagnostic," World Bank Publications - Reports 33317, The World Bank Group.
    2. Bossavie, Laurent & Alderman, Harold & Giles, John & Mete, Cem, 2021. "The effect of height on earnings: Is stature just a proxy for cognitive and non-cognitive skills?," Economics & Human Biology, Elsevier, vol. 43(C).
    3. Marta Palczynska, 2018. "Wage premia for skills: The complementarity of cognitive and non-cognitive skills," IBS Working Papers 09/2018, Instytut Badan Strukturalnych.
    4. Melchior Vella, 2024. "The relationship between the Big Five personality traits and earnings: Evidence from a meta‐analysis," Bulletin of Economic Research, Wiley Blackwell, vol. 76(3), pages 685-712, July.
    5. Huerta, María del Carmen, 2019. "Evaluación de habilidades socioemocionales y transversales: un estado del arte," Sector/thematic working papers 1419, CAF Development Bank Of Latinamerica.
    6. Rentería, José María, 2023. "The collateral effects of private school expansion in a deregulated market: Peru, 1996–2019," International Journal of Educational Development, Elsevier, vol. 102(C).
    7. Bai, Caiquan & Sun, Zhang & Feng, Chen & Xiao, Weiwei, 2024. "Human capital and cooking fuel choices in rural China: Perspective from cognitive and noncognitive skills," Energy Policy, Elsevier, vol. 184(C).
    8. Ajayi,Kehinde & Das,Smita & Delavallade,Clara Anne & Ketema,Tigist Assefa & Rouanet,Lea Marie, 2022. "Gender Differences in Socio-Emotional Skills and Economic Outcomes : New Evidencefrom 17 African Countries," Policy Research Working Paper Series 10197, The World Bank.

    More about this item

    Keywords

    Education For All; Educational Populations; Education for Development (superceded);
    All these keywords.

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