6.2 Correlation: Socioemotional Skills, Earnings, and Formality Status

FIGURE 6.2 Correlation: Socioemotional Skills, Earnings, and Formality Status

Source: data of the 2013 Pakistan labor and Skills Survey (lSS) and 2012 Sri lanka Skills toward Employment and Productivity (STEP).

opposite is found: workers with higher hostility bias are more likely to be in the informal sector, which echoes the findings in Colombia, where less hostility bias is significantly associated with a 3 percent greater chance of employment in the formal sector (Acosta, Muller, and Sarzosa 2020). Informal sector workers in Pakistan are more likely to score higher on decision-making and grit. Informal sector workers in Sri Lanka exhibit lower levels of all socioemotional skills other than the hostility bias.

In both Pakistan and Sri Lanka, the top quintile has greater socioemotional skills, with the exception of the bottom quintile in Sri Lanka, which shows slightly more hostility bias than the top quintile (figure 6.4). Nyhus and Pons (2005) point out that the advantages of growing up in high-income households include more than superior education and welfare. These households also transmit soft skills, such as motivation and discipline, that are rewarded eventually by employers (Dunifon and Duncan 1998). People in higher-income households are less likely to experience stress or instability at home, while children in poorer households are more likely to live in crowded homes and in underserved neighborhoods. This experience has an impact on socioemotional skills. Individuals in higher-income households thus report greater levels of extroversion and conscientiousness (de Vries and Rentfrow 2016).