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hubie [soylentnews.org] writes:

An analysis shows that routine manual skills increases productivity and earnings in early career stages, while structured training and cognitive abstract skills have long-term effects [unibocconi.eu]:

A new study [doi.org] by Jeroma Adda (Department of Economics [unibocconi.eu]) finds that the acquisition of skills is the main contributor to higher salaries for workers, with the magnitude of the effect differing according to the type of skill and the career stage of the worker. Although workers can acquire skills on the job, those who undergo training before entering the job market generally obtain greater wages and are in unemployment less often.

To unpack their findings, it is first important to understand that research on labor markets distinguishes the tasks workers perform into two categories: routine-manual (RM) tasks, which follow well-defined and repetitive procedures that require a modest amount of training; and cognitive-abstract (CA) tasks, which require more technical and creative capabilities. [...] Their results indicate that the accumulation of RM and CA skills over the course of an individual's career is the most important driver of wage growth. RM skills contribute more significantly to increases in worker productivity and earnings in the first years of their careers, but once a set of basic skills has been acquired their contribution to wage growth reduces to zero. On the other hand, CA skills take a longer time to be accumulated, and thus take longer to affect earnings, but have a longer-lasting impact, sustained throughout the individuals' career. These differential returns translate to workers in the CA sector earning, on average, higher wages than those in predominantly RM sectors.

Such skills can also be accumulated through a training period that takes place before labor market entry, and the authors estimate the impact of undertaking such a program. When compared to untrained workers, trained individuals are able to accumulate more CA experience, which besides the direct wage benefits, also improves other aspects of job matching: trained workers become unemployed less often and receive competing job offers at a higher rate. [...]

The authors also find that mobility of workers across the labor market contributes to higher salaries. Switching between different jobs generates a significant increase in earnings, but this is concentrated in the early years of the worker's career, namely the first job move. Though this change produces large gains, these quickly decline and additional mobility does not seem to contribute to larger returns. However, the authors also observe the existence of lock-in effects: workers are initially allocated to a sector for which they are not the most suited, but the accumulation of experience specific to that sector disincentivizes them from moving to jobs in other sectors.

Journal Reference:
Jerome Adda and Christian Dustmann, Sources of Wage Growth, J Pol Econ, 2022. DOI: 10.1086/721657 [doi.org]

Original Submission