Soft Skills, Competition, and Hiring Discrimination

Christian Valencia, Sarah Janzen, Yashodhan Ghorpade and Amanina Binti Abdur Rahman

No 10755, Policy Research Working Paper Series from The World Bank

Abstract: This paper conducts a correspondence study to assess demand for soft skills in the context of hiring discrimination in Malaysia. No evidence of gender-based discrimination is found, including in science, technology, engineering, and mathematics occupations. However, in line with previous studies in the same context, there is evidence of ethnic discrimination. The paper then test the relevance of two soft skills: leadership and teamwork. These tests find some evidence that the labor market rewards simple signals of teamwork for the average applicant. Teamwork also plays an important role in the context of labor market discrimination, reducing the discrimination gap by 40 percent. In contrast, signaling leadership skills has no effect. Last, the paper considers the role of labor market competition. Companies facing competition in the labor market, measured by the number of competitors advertising similar positions, are 56 to 66 percent less likely to discriminate. On the supply side, discrimination increases with the relative quality of the pool of applicants. The results provide novel evidence that soft skills and labor market competition both play important roles in understanding hiring discrimination. This underlines potential pathways to overcome labor market discrimination and improve job matching.

Date: 2024-04-17
New Economics Papers: this item is included in nep-sea
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Working Paper: Soft Skills, Competition, and Hiring Discrimination (2024)
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