The Influence of Non-Cognitive Skills on Wages within and between Firms : Evidence from Bangladesh's Formal Sector
Many employers and employees believe that non-cognitive skills are an important contributor to labor market success. This study has assessed the empirical evidence for such a claim in the case of Bangladesh by evaluating unique employer-employee ma...
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/919881493918760759/The-influence-of-non-cognitive-skills-on-wages-within-and-between-firms-evidence-from-Bangladeshs-formal-sector http://hdl.handle.net/10986/26731 |
| Summary: | Many employers and employees believe
that non-cognitive skills are an important contributor to
labor market success. This study has assessed the empirical
evidence for such a claim in the case of Bangladesh by
evaluating unique employer-employee matched labor market
data. The analysis is based on data collected from 6,981
workers in 500 formal sector firms in Bangladesh's five
largest formal economic sectors. Using ordinary least
squares and firm fixed-effect models, the study assesses
correlations between wages and the so-called "big
five" personality traits, and augments the analysis
with the latent personality scores captured by the Rasch
model. Comparing the ordinary least squares and fixed-effect
models reveals statistically significant correlations
between personality traits and wages, within and across
firms. The results appear to indicate that non-cognitive
skills are correlated with a worker's likelihood of
achieving success in the labor market. Although many of the
findings are consistent with the literature, the analysis
reveals specific patterns that appear to be unique to
Bangladesh, including a positive correlation between
“emotional stability” and wages and a negative correlation
between "grit" and wages, especially among
manufacturing workers. Differences across firms could
indicate that firms that offer higher wages may tend to
attract workers with distinct types of non-cognitive skills,
whereas differences within firms may indicate that
variations in non-cognitive skills are associated with
disparities in firm-level wage structures. Correlations
between wages and personality traits are more prominent
among large firms than among small or medium-sized firms. |
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