Skills, signals, and employability: An experimental investigation

Because most skills of labor-market entrants are not directly observed by employers, individuals acquire skill signals. To study which signals are valued by employers, we randomize several skill signals on resumes of fictitious applicants among which we ask a large representative sample of German human-resource managers to choose. We find that signals in both studied domains – cognitive and social skills – have significant effects on being invited for a job interview. Consistent with their relevance, expectedness, and credibility, different signals are effective for apprenticeship applicants and college graduates. While GPAs and social skills are significant for both genders, females are particularly rewarded for IT and language skills. Older HR managers value school grades less and other signals more. HR managers in larger firms value college grades more.