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Individualism, Human Capital Formation, and Labor Market Success

Author

Listed:
  • Hartinger, Katharina

    (Catholic University of Eichstätt-Ingolstadt)

  • Resnjanskij, Sven

    (CESifo)

  • Ruhose, Jens

    (University of Kiel)

  • Wiederhold, Simon

    (Ifo Institute for Economic Research)

Abstract

There is an ongoing debate about the economic effects of individualism. We establish that individualism leads to better educational and labor market outcomes. Using data from the largest international adult skill assessment, we identify the effects of individualism by exploiting variation between migrants at the origin country, origin language, and person level. Migrants from more individualistic cultures have higher cognitive skills and larger skill gains over time. They also invest more in their skills over the life-cycle, as they acquire more years of schooling and are more likely to participate in adult education activities. In fact, individualism is more important in explaining adult skill formation than any other cultural trait that has been emphasized in previous literature. In the labor market, more individualistic migrants earn higher wages and are less often unemployed. We show that our results cannot be explained by selective migration or omitted origin-country variables.

Suggested Citation

  • Hartinger, Katharina & Resnjanskij, Sven & Ruhose, Jens & Wiederhold, Simon, 2021. "Individualism, Human Capital Formation, and Labor Market Success," IZA Discussion Papers 14820, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp14820
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    References listed on IDEAS

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    1. David J. Deming, 2017. "The Growing Importance of Social Skills in the Labor Market," The Quarterly Journal of Economics, Oxford University Press, vol. 132(4), pages 1593-1640.
    2. Alícia Adserà & Mariola Pytliková, 2015. "The Role of Language in Shaping International Migration," Economic Journal, Royal Economic Society, vol. 125(586), pages 49-81, August.
    3. M. Keith Chen, 2013. "The Effect of Language on Economic Behavior: Evidence from Savings Rates, Health Behaviors, and Retirement Assets," American Economic Review, American Economic Association, vol. 103(2), pages 690-731, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    cognitive skills; culture; individualism; labor market; international comparisons;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • I20 - Health, Education, and Welfare - - Education - - - General
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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