IDEAS home Printed from https://ideas.repec.org/p/cid/wpfacu/143a.html
   My bibliography  Save this paper

The Value of Early-Career Skills

Author

Listed:
  • Simon Wiederhold
  • Christina Langer

Abstract

We develop novel measures of early-career skills that are more detailed, comprehensive, and labor-market-relevant than existing skill proxies. We exploit that skill requirements of apprenticeships in Germany are codified in state-approved, nationally standardized apprenticeship plans. These plans provide more than 13,000 different skills and the exact duration of learning each skill. Following workers over their careers in administrative data, we find that cognitive, social, and digital skills acquired during apprenticeship are highly – yet differently – rewarded. We also document rising returns to digital and social skills since the 1990s, with a more moderate increase in returns to cognitive skills.

Suggested Citation

  • Simon Wiederhold & Christina Langer, 2023. "The Value of Early-Career Skills," CID Working Papers 143a, Center for International Development at Harvard University.
    • Handle: RePEc:cid:wpfacu:143a
    as

    Download full text from publisher

    File URL: https://growthlab.cid.harvard.edu/sites/projects.iq.harvard.edu/files/growthlab/files/2023-02-cid-rfwp-143-early-career-skills.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. David Deming & Lisa B. Kahn, 2018. "Skill Requirements across Firms and Labor Markets: Evidence from Job Postings for Professionals," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 337-369.
    2. Joseph G. Altonji & Charles R. Pierret, 2001. "Employer Learning and Statistical Discrimination," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(1), pages 313-350.
    3. Dauth, Wolfgang & Eppelsheimer, Johann, 2020. "Preparing the sample of integrated labour market biographies (SIAB) for scientific analysis," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 54(1), pages 1-10.
    4. Anders Bohlmark & Matthew J. Lindquist, 2006. "Life-Cycle Variations in the Association between Current and Lifetime Income: Replication and Extension for Sweden," Journal of Labor Economics, University of Chicago Press, vol. 24(4), pages 879-900, October.
    5. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," NBER Chapters, in: Investment in Human Beings, pages 9-49, National Bureau of Economic Research, Inc.
    6. Borghans, Lex & ter Weel, Bas, 2007. "The diffusion of computers and the distribution of wages," European Economic Review, Elsevier, vol. 51(3), pages 715-748, April.
    7. Stephan Maurer & Guido Schwerdt & Simon Wiederhold, 2023. "Do Role Models Matter in Large Classes? New Evidence on Gender Match Effects in Higher Education," CESifo Working Paper Series 10208, CESifo.
    8. Eric A. Hanushek & Guido Schwerdt & Ludger Woessmann & Lei Zhang, 2017. "General Education, Vocational Education, and Labor-Market Outcomes over the Lifecycle," Journal of Human Resources, University of Wisconsin Press, vol. 52(1), pages 48-87.
    9. Steven Haider & Gary Solon, 2006. "Life-Cycle Variation in the Association between Current and Lifetime Earnings," American Economic Review, American Economic Association, vol. 96(4), pages 1308-1320, September.
    10. Dauth, Wolfgang & Eppelsheimer, Johann, 2020. "Preparing the sample of integrated labour market biographies (SIAB) for scientific analysis," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 54(1), pages .10(1-10).
    11. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
    12. Stephen Hansen & Tejas Ramdas & Raffaella Sadun & Joseph Fuller, 2021. "The Demand for Executive Skills," CESifo Working Paper Series 9152, CESifo.
    13. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4, National Bureau of Economic Research, Inc.
    14. 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.
    15. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
    16. Paul Beaudry & Ethan Lewis, 2014. "Do Male-Female Wage Differentials Reflect Differences in the Return to Skill? Cross-City Evidence from 1980-2000," American Economic Journal: Applied Economics, American Economic Association, vol. 6(2), pages 178-194, April.
    17. Brad Hershbein & Lisa B. Kahn, 2018. "Do Recessions Accelerate Routine-Biased Technological Change? Evidence from Vacancy Postings," American Economic Review, American Economic Association, vol. 108(7), pages 1737-1772, July.
    18. Per-Anders Edin & Peter Fredriksson & Martin Nybom & Björn Öckert, 2022. "The Rising Return to Noncognitive Skill," American Economic Journal: Applied Economics, American Economic Association, vol. 14(2), pages 78-100, April.
    19. David H. Autor & Michael J. Handel, 2013. "Putting Tasks to the Test: Human Capital, Job Tasks, and Wages," Journal of Labor Economics, University of Chicago Press, vol. 31(S1), pages 59-96.
    20. Falck, Oliver & Heimisch-Roecker, Alexandra & Wiederhold, Simon, 2021. "Returns to ICT skills," Research Policy, Elsevier, vol. 50(7).
    21. 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.
    22. 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.
    23. Alexander Patt & Jens Ruhose & Simon Wiederhold & Miguel Flores, 2021. "International Emigrant Selection on Occupational Skills," Journal of the European Economic Association, European Economic Association, vol. 19(2), pages 1249-1298.
    24. Raj Chetty & John N. Friedman & Jonah E. Rockoff, 2014. "Measuring the Impacts of Teachers II: Teacher Value-Added and Student Outcomes in Adulthood," American Economic Review, American Economic Association, vol. 104(9), pages 2633-2679, September.
    25. Janssen, Simon & Mohrenweiser, Jens, 2018. "The Shelf Life of Incumbent Workers during Accelerating Technological Change: Evidence from a Training Regulation Reform," IZA Discussion Papers 11312, Institute of Labor Economics (IZA).
    26. Guido Matias Cortes, 2016. "Where Have the Middle-Wage Workers Gone? A Study of Polarization Using Panel Data," Journal of Labor Economics, University of Chicago Press, vol. 34(1), pages 63-105.
    27. Jeffrey R Kling & Jeffrey B Liebman & Lawrence F Katz, 2007. "Experimental Analysis of Neighborhood Effects," Econometrica, Econometric Society, vol. 75(1), pages 83-119, January.
    28. Maarten Goos & Alan Manning & Anna Salomons, 2014. "Explaining Job Polarization: Routine-Biased Technological Change and Offshoring," American Economic Review, American Economic Association, vol. 104(8), pages 2509-2526, August.
    29. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
    30. Eggenberger, Christian & Rinawi, Miriam & Backes-Gellner, Uschi, 2018. "Occupational specificity: A new measurement based on training curricula and its effect on labor market outcomes," Labour Economics, Elsevier, vol. 51(C), pages 97-107.
    31. Enghin Atalay & Phai Phongthiengtham & Sebastian Sotelo & Daniel Tannenbaum, 2020. "The Evolution of Work in the United States," American Economic Journal: Applied Economics, American Economic Association, vol. 12(2), pages 1-34, April.
    32. Fitzenberger, Bernd & Seidlitz, Arnim, 2020. "The 2011 Break in the part-time indicator and the evolution of wage inequality in Germany," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 54(1), pages 1-1.
    33. 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.
    34. repec:iab:iabjlr:v:54:i:1:p:art.10 is not listed on IDEAS
    35. David J. Deming, 2017. "The Growing Importance of Social Skills in the Labor Market," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(4), pages 1593-1640.
    36. James Heckman & Jose Scheinkman, 1987. "The Importance of Bundling in a Gorman-Lancaster Model of Earnings," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(2), pages 243-255.
    37. Sara B. Heller & Judd B. Kessler, 2022. "Soft Skills in the Youth Labor Market," AEA Papers and Proceedings, American Economic Association, vol. 112, pages 121-125, May.
    38. Fitzenberger, Bernd & Seidliz, Arnim, 2020. "The 2011 Break in the part-time indicator and the evolution of wage inequality in Germany," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 54(1), pages .1(1-14).
    39. Almlund, Mathilde & Duckworth, Angela Lee & Heckman, James & Kautz, Tim, 2011. "Personality Psychology and Economics," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 4, chapter 0, pages 1-181, Elsevier.
    40. David J. Deming, 2022. "Four Facts about Human Capital," Journal of Economic Perspectives, American Economic Association, vol. 36(3), pages 75-102, Summer.
    41. Mikko Silliman & Hanna Virtanen, 2022. "Labor Market Returns to Vocational Secondary Education," American Economic Journal: Applied Economics, American Economic Association, vol. 14(1), pages 197-224, January.
    42. Hanushek, Eric A. & Woessmann, Ludger, 2015. "The Knowledge Capital of Nations: Education and the Economics of Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262029170, April.
    43. repec:iab:iabjlr:v:54:i:1:p:art.1 is not listed on IDEAS
    44. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-990, October.
    45. Frodermann, Corinna & Schmucker, Alexandra & Seth, Stefan & Vom Berge, Philipp, 2021. "Sample of Integrated Labour Market Biographies (SIAB) 1975-2019," FDZ Datenreport. Documentation on Labour Market Data 202101_en, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    46. repec:iab:iabfda:201902(en is not listed on IDEAS
    47. J. Carter Braxton & Bledi Taska, 2023. "Technological Change and the Consequences of Job Loss," American Economic Review, American Economic Association, vol. 113(2), pages 279-316, February.
    48. Fitzenberger, Bernd & Seidliz, Arnim, 2020. "The 2011 Break in the part-time indicator and the evolution of wage inequality in Germany," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 54(1), pages 1-14.
    49. Girsberger, Esther Mirjam & Koomen, Miriam & Krapf, Matthias, 2022. "Interpersonal, cognitive, and manual skills: How do they shape employment and wages?," Labour Economics, Elsevier, vol. 78(C).
    50. Wolfgang Dauth & Johann Eppelsheimer, 2020. "Preparing the sample of integrated labour market biographies (SIAB) for scientific analysis: a guide," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 54(1), pages 1-14, December.
    51. Bernd Fitzenberger & Arnim Seidlitz, 2020. "The 2011 break in the part-time indicator and the evolution of wage inequality in Germany," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 54(1), pages 1-14, December.
    52. David J Deming & Kadeem Noray, 2020. "Earnings Dynamics, Changing Job Skills, and STEM Careers," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(4), pages 1965-2005.
    53. Barbara Biasi & Song Ma, 2022. "The Education-Innovation Gap," CESifo Working Paper Series 9653, CESifo.
    54. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
    55. Antoni, Manfred & Schmucker, Alexandra & Seth, Stefan & Vom Berge, Philipp, 2019. "Sample of integrated labour market biographies (SIAB) 1975-2017," FDZ Datenreport. Documentation on Labour Market Data 201902_en, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    56. Richard J. Murnane & John B. Willett & Yves Duhaldeborde & John H. Tyler, 2000. "How important are the cognitive skills of teenagers in predicting subsequent earnings?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 19(4), pages 547-568.
    57. repec:iab:iabjlr:v:54:i:54:p:art.1,14 is not listed on IDEAS
    58. repec:iab:iabfda:202101(en is not listed on IDEAS
    59. Barbara Biasi & Song Ma, 2022. "The Education-Innovation Gap," NBER Working Papers 29853, National Bureau of Economic Research, Inc.
    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. Eric A. Hanushek & Babs Jacobs & Guido Schwerdt & Rolf van der Velden & Stan Vermeulen & Simon Wiederhold, 2021. "Where Do STEM Graduates Stem From? The Intergenerational Transmission of Comparative Skill Advantages," CESifo Working Paper Series 9388, CESifo.
    2. Guo, Yuchen Mo & Falck, Oliver & Langer, Christina & Lindlacher, Valentin & Wiederhold, Simon, 2024. "Training, Automation, and Wages: Worker-Level Evidence," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302366, Verein für Socialpolitik / German Economic Association.
    3. Lipowski, Cäcilia & Salomons, Anna & Zierahn-Weilage, Ulrich, 2024. "Expertise at work: New technologies, new skills, and worker impacts," ZEW Discussion Papers 24-044, ZEW - Leibniz Centre for European Economic Research.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Simon Wiederhold & Christina Langer, 2023. "The Value of Early-Career Skills," Growth Lab Working Papers 204, Harvard's Growth Lab.
    2. Ludger Woessmann, 2024. "Skills and Earnings: A Multidimensional Perspective on Human Capital," CESifo Working Paper Series 11428, CESifo.
    3. Koomen, Miriam & Backes-Gellner, Uschi, 2022. "Occupational tasks and wage inequality in West Germany: A decomposition analysis," Labour Economics, Elsevier, vol. 79(C).
    4. Lipowski, Cäcilia & Salomons, Anna & Zierahn-Weilage, Ulrich, 2024. "Expertise at work: New technologies, new skills, and worker impacts," ZEW Discussion Papers 24-044, ZEW - Leibniz Centre for European Economic Research.
    5. Koomen, Miriam & Backes-Gellner, Uschi, 2022. "Occupational Tasks and Wage Inequality in Germany: A Decomposition Analysis," IZA Discussion Papers 15702, Institute of Labor Economics (IZA).
    6. Hensvik, Lena & Skans, Oskar Nordström, 2023. "The skill-specific impact of past and projected occupational decline," Labour Economics, Elsevier, vol. 81(C).
    7. Mahdi Gholami & Samuel Muehlemann, 2024. "Mastering Math: A Gateway to Better Firms and Higher Earnings," Economics of Education Working Paper Series 0212, University of Zurich, Department of Business Administration (IBW), revised May 2024.
    8. Falck, Oliver & Heimisch-Roecker, Alexandra & Wiederhold, Simon, 2021. "Returns to ICT skills," Research Policy, Elsevier, vol. 50(7).
    9. 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.
    10. Eric A. Hanushek & Babs Jacobs & Guido Schwerdt & Rolf van der Velden & Stan Vermeulen & Simon Wiederhold, 2021. "Where Do STEM Graduates Stem From? The Intergenerational Transmission of Comparative Skill Advantages," CESifo Working Paper Series 9388, CESifo.
    11. David Dorn & Florian Schoner & Moritz Seebacher & Lisa Simon & Ludger Woessmann, 2024. "Multidimensional Skills as a Measure of Human Capital: Evidence from LinkedIn Profiles," Papers 2409.18638, arXiv.org.
    12. Cnossen, Femke & Piracha, Matloob & Tchuente, Guy, 2021. "Learning the Right Skill: The Returns to Social, Technical and Basic Skills for Middle-Educated Graduates," GLO Discussion Paper Series 979, Global Labor Organization (GLO).
    13. Cortes, Matias & Lerche, Adrian & Schönberg, Uta & Tschopp, Jeanne, 2023. "Technological Change, Firm Heterogeneity and Wage Inequality," IZA Discussion Papers 16070, Institute of Labor Economics (IZA).
    14. Consoli, Davide & Marin, Giovanni & Rentocchini, Francesco & Vona, Francesco, 2023. "Routinization, within-occupation task changes and long-run employment dynamics," Research Policy, Elsevier, vol. 52(1).
    15. Ziegler, Lennart, 2021. "Skill Demand and Wages. Evidence from Linked Vacancy Data," IZA Discussion Papers 14511, Institute of Labor Economics (IZA).
    16. Eric A. Hanushek & Jens Ruhose & Ludger Woessmann, 2017. "Knowledge Capital and Aggregate Income Differences: Development Accounting for US States," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(4), pages 184-224, October.
    17. Moritz Drechsel‐Grau & Andreas Peichl & Kai D. Schmid & Johannes F. Schmieder & Hannes Walz & Stefanie Wolter, 2022. "Inequality and income dynamics in Germany," Quantitative Economics, Econometric Society, vol. 13(4), pages 1593-1635, November.
    18. Bachmann, Ronald & Demir, Gökay & Green, Colin & Uhlendorff, Arne, 2022. "The Role of Within-Occupation Task Change in Wage Development," VfS Annual Conference 2022 (Basel): Big Data in Economics 264113, Verein für Socialpolitik / German Economic Association.
    19. Hernnäs, Sofia, 2020. "Automation, Task Content and Occupations when Skills and Tasks are Bundled," Working Paper Series 2020:6, Uppsala University, Department of Economics.
    20. Freund, L. B., 2022. "Superstar Teams: The Micro Origins and Macro Implications of Coworker Complementarities," Janeway Institute Working Papers 2235, Faculty of Economics, University of Cambridge.

    More about this item

    Keywords

    returns to skills; apprenticeship plans; labor market; earnings; early-career skills;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

    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:cid:wpfacu:143a. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chuck McKenney (email available below). General contact details of provider: https://edirc.repec.org/data/ciharus.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.