Soft Skills and the Wage Progression of Low-Skilled Workers - Economics Seminar

Event Date: 8 March 2023

Speaker: Rachel Griffith, Professor of Economics, University of Manchester

Time: 4-5:15pm

Location: Please contact Rachel Hill (r.hill@strath.ac.uk) for Zoom details. On campus: CW506b

Abstract: "There is increasing concern in many developed economies over the lack of opportunities for workers without formal educational questions to achieve pay growth and progression. High skilled workers have experienced strong pay growth, while wages of low skilled workers have stagnated. A rich literature has documented the growing importance of social skills in the labour market, particularly for workers in occupations that also require high cognitive skills, such as managers, teachers, doctors and lawyers. Are these interpersonal skills also important for workers in low skilled occupations? We make three contributions in this paper. First, we highlight the importance of a range of soft skills that facilitate team work and effective interaction with colleagues in the workplace on wage progression for low-skilled workers. The previously literature has largely focused on their importance for high-skilled workers. It has also focused almost exclusively on wage levels, rather than wage progression. Second, we show how the requirements for these interpersonal skills varies across firms, and how this impacts on wages. As far as we are aware we are the first paper to combine occupation level data with firm level data. Previous work has focused primarily on occupation-level analysis of skill requirements. Third, we propose a simple, but novel, theory for why workers in these occupations that have high soft skill, but low formal educational, requirements may be particularly important for the production process, through interacting with the sophistication of the firms other assets. To gain intuition for what type of soft skills we consider, and the role they play in production, think of a worker in a low skilled occupation, for example a personal assistant, a teaching or nursing assistance, an operative who has to coordinate with other workers, or a maintenance worker. People are better at these jobs if they can effectively communicate with other workers, listen to the problems they face, coordinate their activities with other workers, and reliably engage in team work. These attributes may be difficult to measure and verify. Yet, they allow the worker to perform tasks which complement the tasks performed by other workers, and perhaps most importantly of workers in high skilled occupations within the firm. If these workers perform their tasks well they can increase the productivity of the high skilled employees."

Published: 15 February 2023