New Skills Are The High Road To Higher Salaries, Study Finds

Arthur T Knackerbracket has processed the following story:

A new study by Jeroma Adda (Department of Economics) 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.

People make a series of choices throughout their careers: whether to get educated/trained before working, which job offers to accept, or whether they should quit their current job. Each decision has an impact on earnings that may unfold over many years, and understanding their effects requires not only examining immediate returns but longer-term outcomes. With this aim, Professor Adda and Christian Dustmann (University College London), in a forthcoming paper in the Journal of Political Economy, estimate a mathematical model to understand the determinants of wage growth. Using comprehensive data on labor market outcomes of German men over several decades, they find that workers' ability levels, their accumulation of human capital, and changing of jobs across different sectors and firms all have significant positive contributions to earnings.

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