After getting our degree, entering the job market is one thing we aspire to do. Moving up in a world is all about finding a good-paying job to sustain yourself. However, in the race for skills and connections, it is reported that people who take more time to polish and refine their skills have a higher chance of landing a better-paying job than those with fewer skills.

Professor Jeroma Adda from Bocconi University and Christian Dustmann from University College London examined the immediate returns and long-term benefits of certain decisions workers make when entering the labour market. Focusing on German workers over several decades, their mathematical model reveals that certain factors can have an impact on employee earnings. Including their accumulation of human capital, how often they change jobs, and their employee’s ability level.

Skills = High Paying Roles 

The study found acquiring more skills, both physical and mental, increases a worker’s chances of getting high-paying jobs. While receiving better offers from competing companies, and avoiding unemployment.

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The tasks workers were divided into two roles by Adda and Dustmann:

  • The routine-manual (RM) Tasks
  • Cognitive-abstract (CA) tasks.

Routine manual tasks involve well-defined and repetitive procedures. Such tasks require a modest amount of training — such as manual labour on a construction site. Cognitive abstract tasks require more technical and creative capabilities. Such tasks are acquired in school or through a specialized job training program.

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The team, further classified each occupation according to the type of tasks they perform. To figure out the return for each skill Results show that accumulating RM and CA skills over an entire career is the most important driver of salary growth. RM skills contribute more significantly to increases in a worker’s earnings during the first few years of their career.

“For workers, we learn the longer-term advantages of accumulating CA skills. The substantial returns individuals may obtain from undergoing training, which may not materialize immediately but have a significant impact later in their careers. For policymakers, we learn that returns to experience can generate inefficiency by locking workers into specific sectors, which may disproportionally affect workers who enter the job market during periods of restricted choices, such as recessions,” the researchers write in a media release.

More Skills = More Offers 

While RM skills can help workers achieve a job it no longer helps them advance their career to a higher paying one. Meanwhile, CM skills have a long-lasting effect even though they take a long time to develop.

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The study found that jobs that require CA skills have higher average salaries than those in RM sectors. Researchers also found that a subset of skills can also make workers more noticeable among their peers. The more skills a worker holds they are more likely to get recruited for their services.

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