The effects of cognitive and non-cognitive skills on earnings : the case of Mueang District, Khonkaen Province of Thailand

Abstract

An employment study by Mincer illustrated that earning differentials are directly correlated with the cognitive skills; number of years of schooling, and the number of training sessions they have successfully completed(Mincer, 1958: 281 302). Later, some studies recognized that both cognitive and noncognitive skills are strong forecasters determining schooling attainment and wages. Noncognitive skills affect level of earnings as a latent influence to cognitive abilities (Heckman, Stixrud and Urzua, 2006: 134; Weel, 2008: 729737). Therefore, importance of non cognitive skills is to determine productivity in economic framework (wage equals to marginal product under perfect competition market assumption). How can we identify and measure noncognitive skillsWeel addressed that it has been rather unclear what non ognitive skills are and how theseskills can be measured. (Weel, 2008: 729). This study investigates three objectives. First, how is the significance of cognitive and non-cognitive skills as an explanation of earnings? Second, what are differences in wages across occupations to be explained by non-cognitive traits? Third what are significant traits between males and females cross occupations. Noncognitive variables employed in this study are the locus of control, self-esteem, the big five personalities (openness, agreeableness, extraversion, conscientiousness, neuroticism), and conflict management (withdrawn, forcing, smoothing, compromising, confronting). These traits are found to have different effects for various occupations and gender.