IDEAS home Printed from https://ideas.repec.org/p/rco/dpaper/63.html
   My bibliography  Save this paper

Skills, Signals, and Employability: An Experimental Investigation

Author

Listed:
  • Piopiunik, Marc

    (ifo Institute at the University of Munich)

  • Schwerdt, Guido

    (University of Konstanz)

  • Simon, Lisa

    (ifo Institute at the University of Munich)

  • Woessmann, Ludger

    (ifo and LMU Munich)

Abstract

As skills of labor-market entrants are usually not directly observed by employers, individuals acquire skill signals. To study which signals are valued by employers, we simultaneously and independently randomize a broad range of skill signals on pairs of resumes of fictitious applicants among which we ask a large representative sample of German human-resource managers to choose. We find that signals in all three studied domains - cognitive skills, social skills, and maturity - have a significant effect on being invited for a job interview. Consistent with the relevance, expectedness, and credibility of different signals, the specific signal that is effective in each domain differs between apprenticeship applicants and college graduates. While GPAs and social skills are significant for both genders, males are particularly rewarded for maturity and females for IT and language skills. Older HR managers value school grades less and other signals more, whereas HR managers in larger firms value college grades more.

Suggested Citation

  • Piopiunik, Marc & Schwerdt, Guido & Simon, Lisa & Woessmann, Ludger, 2018. "Skills, Signals, and Employability: An Experimental Investigation," Rationality and Competition Discussion Paper Series 63, CRC TRR 190 Rationality and Competition.
  • Handle: RePEc:rco:dpaper:63
    as

    Download full text from publisher

    File URL: https://rationality-and-competition.de/wp-content/uploads/discussion_paper/63.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Patrick J. Bayer & Peter Arcidiacono & Aurel Hizmo, 2010. "Web Appendix: Beyond Signaling and Human Capital: Education and the Revelation of Ability," Working Papers 10-52, Duke University, Department of Economics.
    2. Eva O. Arceo-Gomez & Raymundo M. Campos-Vazquez, 2014. "Race and Marriage in the Labor Market: A Discrimination Correspondence Study in a Developing Country," American Economic Review, American Economic Association, vol. 104(5), pages 376-380, May.
    3. Booth, Alison & Leigh, Andrew, 2010. "Do employers discriminate by gender? A field experiment in female-dominated occupations," Economics Letters, Elsevier, vol. 107(2), pages 236-238, May.
    4. Schwerdt, Guido & Woessmann, Ludger, 2017. "The information value of central school exams," Economics of Education Review, Elsevier, vol. 56(C), pages 65-79.
    5. Raj Chetty & John N. Friedman & Nathaniel Hilger & Emmanuel Saez & Diane Whitmore Schanzenbach & Danny Yagan, 2011. "How Does Your Kindergarten Classroom Affect Your Earnings? Evidence from Project Star," The Quarterly Journal of Economics, Oxford University Press, vol. 126(4), pages 1593-1660.
    6. Hanushek, Eric A. & Schwerdt, Guido & Wiederhold, Simon & Woessmann, Ludger, 2015. "Returns to skills around the world: Evidence from PIAAC," European Economic Review, Elsevier, vol. 73(C), pages 103-130.
    7. Humburg, Martin & van der Velden, Rolf, 2015. "Skills and the graduate recruitment process: Evidence from two discrete choice experiments," Economics of Education Review, Elsevier, vol. 49(C), pages 24-41.
    8. Casey B. Mulligan, 1999. "Galton versus the Human Capital Approach to Inheritance," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 184-224, December.
    9. Andrew Weiss, 1995. "Human Capital vs. Signalling Explanations of Wages," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 133-154, Fall.
    10. Peter Arcidiacono & Patrick Bayer & Aurel Hizmo, 2010. "Beyond Signaling and Human Capital: Education and the Revelation of Ability," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 76-104, October.
    11. Catherine J. Weinberger, 2014. "The Increasing Complementarity between Cognitive and Social Skills," The Review of Economics and Statistics, MIT Press, vol. 96(5), pages 849-861, December.
    12. Hanushek, Eric A. & Schwerdt, Guido & Wiederhold, Simon & Woessmann, Ludger, 2017. "Coping with change: International differences in the returns to skills," Economics Letters, Elsevier, vol. 153(C), pages 15-19.
    13. David J. Deming & Noam Yuchtman & Amira Abulafi & Claudia Goldin & Lawrence F. Katz, 2016. "The Value of Postsecondary Credentials in the Labor Market: An Experimental Study," American Economic Review, American Economic Association, vol. 106(3), pages 778-806, March.
    14. Eric A. Hanushek & Ludger Woessmann, 2008. "The Role of Cognitive Skills in Economic Development," Journal of Economic Literature, American Economic Association, vol. 46(3), pages 607-668, September.
    15. repec:eee:eecrev:v:98:y:2017:i:c:p:199-216 is not listed on IDEAS
    16. James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 411-482, July.
    17. Erik Lindqvist & Roine Vestman, 2011. "The Labor Market Returns to Cognitive and Noncognitive Ability: Evidence from the Swedish Enlistment," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 101-128, January.
    18. John G. Riley, 2001. "Silver Signals: Twenty-Five Years of Screening and Signaling," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 432-478, June.
    19. Neal, Derek A & Johnson, William R, 1996. "The Role of Premarket Factors in Black-White Wage Differences," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 869-895, October.
    20. Bishop, John Hillman, 1989. "Is the Test Score Decline Responsible for the Productivity Growth Decline?," American Economic Review, American Economic Association, vol. 79(1), pages 178-197, March.
    21. Englmaier, Florian & Gebhardt, Georg, 2016. "Social dilemmas in the laboratory and in the field," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 85-96.
    22. Marianne Bertrand & Sendhil Mullainathan, 2004. "Are Emily and Greg More Employable Than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination," American Economic Review, American Economic Association, vol. 94(4), pages 991-1013, September.
    23. Joseph G. Altonji & Charles R. Pierret, 2001. "Employer Learning and Statistical Discrimination," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 313-350.
    24. Murnane, Richard J & Willett, John B & Levy, Frank, 1995. "The Growing Importance of Cognitive Skills in Wage Determination," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 251-266, May.
    25. repec:oup:qjecon:v:132:y:2017:i:4:p:1593-1640. is not listed on IDEAS
    26. Stiglitz, Joseph E, 1975. "The Theory of "Screening," Education, and the Distribution of Income," American Economic Review, American Economic Association, vol. 65(3), pages 283-300, June.
    27. John H. Tyler & Richard J. Murnane & John B. Willett, 2000. "Estimating the Labor Market Signaling Value of the GED," The Quarterly Journal of Economics, Oxford University Press, vol. 115(2), pages 431-468.
    28. Humburg, M. & van der Velden, R.K.W., 2014. "Skills and the graduate recruitment process: Evidence from two discrete choice experiments," ROA Research Memorandum 002, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    29. Heineck, Guido & Anger, Silke, 2010. "The returns to cognitive abilities and personality traits in Germany," Labour Economics, Elsevier, vol. 17(3), pages 535-546, June.
    30. repec:aea:aejapp:v:9:y:2017:i:3:p:223-61 is not listed on IDEAS
    31. repec:hrv:faseco:30367409 is not listed on IDEAS
    32. David Neumark, 2016. "Experimental Research on Labor Market Discrimination," NBER Working Papers 22022, National Bureau of Economic Research, Inc.
    33. Melissa Osborne & Herbert Gintis & Samuel Bowles, 2001. "The Determinants of Earnings: A Behavioral Approach," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1137-1176, December.
    34. Peter A. Riach, 2015. "A field experiment investigating age discrimination in four European labour markets," International Review of Applied Economics, Taylor & Francis Journals, vol. 29(5), pages 608-619, September.
    35. Philip Oreopoulos, 2011. "Why Do Skilled Immigrants Struggle in the Labor Market? A Field Experiment with Thirteen Thousand Resumes," American Economic Journal: Economic Policy, American Economic Association, vol. 3(4), pages 148-171, November.
    36. W. Bentley MacLeod & Evan Riehl & Juan E. Saavedra & Miguel Urquiola, 2017. "The Big Sort: College Reputation and Labor Market Outcomes," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 223-261, July.
    37. Baert, Stijn & Vujic, Suncica, 2016. "Does It Pay to Care? Prosocial Engagement and Employment Opportunities," IZA Discussion Papers 9649, Institute of Labor Economics (IZA).
    38. repec:feb:natura:0058 is not listed on IDEAS
    39. Damon Clark & Paco Martorell, 2014. "The Signaling Value of a High School Diploma," Journal of Political Economy, University of Chicago Press, vol. 122(2), pages 282-318.
    40. Gerrit Mueller & Erik Plug, 2006. "Estimating the Effect of Personality on Male and Female Earnings," ILR Review, Cornell University, ILR School, vol. 60(1), pages 3-22, October.
    41. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:ces:ifosdt:v:71:y:2018:i:04:p:25-29 is not listed on IDEAS

    More about this item

    Keywords

    signals; cognitive skills; social skills; resume; hiring; labor market;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rco:dpaper:63. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Benjamin Langer). General contact details of provider: https://rationality-and-competition.de .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.