6.7 Socioemotional Skills Differ between Men and Women

FIGURE 6.7 Socioemotional Skills Differ between Men and Women

Source: Estimates based on data of the 2014 Pakistan labor and Skills Survey (lSS) and 2012 Sri lanka Skills toward Employment and Productivity (STEP). Note: Only statistically significant results are reported.

These results are consistent with the results of Murnane et al. (2000), who find that US men who are high school graduates with better cognitive skills earn 30 percent more than their counterparts with lesser cognitive skills. The relationship between earnings and educational attainment holds even after controlling for cognitive abilities. This echoes the results of Lleras (2008) using US data, which suggests that schooling may strengthen socioemotional skills, which later foster greater social and economic mobility.

A sensitivity analysis shows that most of the development of socioemotional skills occurs outside of the school environment, in homes and social circles and in the workplace. The education variables in regressions are choice variables correlated with socioeconomic background, and they are endogenous to wage equations (Heckman, Stixrud, and Urzua 2006). For example, people with better cognitive and socioemotional skills may be more likely to achieve better education outcomes to promote these skills (Hansen, Heckman, and Mullen 2004). Parental education can also be endogenous because, relative to their less well-educated peers, more well-educated parents may exhibit a greater probability of passing superior abilities on to their children (Chevalier et al. 2013). Concerned with the endogeneity of education variables, the estimates presented in figure 6.5 (annex 6B, table 6B.1) and figure 6.6 (annex 6B, table 6B.2) are repeated, but with and without these indicators (see annex 6B, tables 6B.3 and 6B.4; see also tables 6B.5 and 6B.6). The reestimated coefficients of socioemotional and cognitive skills reflect both the direct and the indirect effects exerted through schooling (Heckman, Stixrud, and Urzua 2006). However, in both Pakistan and Sri Lanka, the changes in the estimates without education included relative to the corresponding estimates with education included are small, and few of the changes are statistically different from zero. This indicates that the interdependence between socioemotional and cognitive skills and education variables is limited, which is in line with the slight correlation among these variables (see annex 6A, figures 6A.1 and 6A.2). Moreover, the lack of association implies that socioemotional skills are usually developed in families, with friends, in the living environment, and in the workplace rather than in school (Heckman and Mosso 2014).

EXPLANATIONS OF THE VARYING IMPORTANCE OF DIFFERENT SOCIOEMOTIONAL SKILLS

Two explanations for the differences in various socioemotional skills and labor market outcomes may be considered. First, the relative importance of different socioemotional skills may depend on the structure of an economy. Acosta, Muller, and Sarzosa (2020) use evidence from Colombia to argue that the importance of socioemotional skills depends on the employment structure, the type of jobs available, the level of human development, and the differences in economic growth. For instance, evidence suggests that extroversion is positively correlated with earnings or with type of employment in the context of a service-rich economy such as the United States (Fletcher 2013).

Deming (2017) finds that the returns to social skills in the US labor market have been growing, suggesting that the importance of various socioemotional skills is changing as the US economy undergoes structural transformation and adopts new technologies.

There is evidence that the impact of socioemotional skills on labor market outcomes varies by sector. In Pakistan and Sri Lanka, workers in agriculture, manufacturing, and services do not have the same profile of socioemotional skills, which means either workers acquire skills that are valued in their respective sector or they learn these skills as a by-product of working in these jobs and occupations (figure 6.8). In Pakistan, workers in agriculture have more grit than workers in manufacturing or services. This finding reflects the nature of employment in agriculture, which requires perseverance more than other socioemotional skills. In contrast, jobs in services call for intellectual curiosity, innovation, and interaction with other people; service sector workers exhibit higher levels of openness and extroversion in both Pakistan and Sri Lanka. Service workers also show greater hostility bias. A good match between skills and jobs may contribute to labor productivity. However, Sahn and Villa (2016) find that, in Madagascar, socioemotional skills improve labor market outcomes not by boosting productivity but by increasing the chances that people with better socioemotional skills would obtain jobs that pay more.

Similarly, the pervasive informality in Pakistan, where more than one-half of all workers are employed in the informal sector, may drive differences in the returns to skills. Extroversion is the only socioemotional skill that is positively correlated with earnings in Pakistan. This finding is quite different from the conclusions of studies on most highincome countries, where conscientiousness, emotional stability, and grit have a significant impact on wages and other labor market outcomes. Extroverted people may have more success in taking advantage of the personal relationships that are critical in the informal sector. Alternatively, if most informal sector jobs require social interaction, extroverted people may be more successful.

The second explanation for the differences in various socioemotional skills and labor market outcomes revolves around the demands of employers. Thus, Yamauchi et al. (2018) find that Indian employers prefer organized, calm, imaginative, and quiet (less extroverted) applicants over easygoing, sensitive, or outgoing applicants. Kotikula, Hill, and Raza (2019) find that, among urban poor in Dhaka, Bangladesh, persistence, grit, self-discipline, knowledge seeking, and the ability to adapt to change are significantly correlated with a woman worker’s choice between wage employment or self-employment. Women workers who are better at adapting to change or who are self-disciplined are more likely to engage in wage employment. Alternatively, women who are persistent and willing to persevere through challenges are more likely to be self-employed. These patterns in Bangladesh may reflect the impact of sociocultural dynamics, the structure of firm management practices, and, in particular, the importance employers assign to the compliance by production workers with management directives.