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Cognitive and non-cognitive skills, hiring channels, and wages in Bangladesh

Anne Hilger (), Christophe Jalil Nordman () and Leopold R. Sarr ()
Additional contact information
Anne Hilger: Paris School of Economics, IRD, UMR 225 DIAL, PSL, Université Paris Dauphine, LEDa, IFP (Pondicherry, India)
Christophe Jalil Nordman: IRD, UMR 225 DIAL, PSL, Université Paris Dauphine, LEDa, IFP (Pondicherry, India)
Leopold R. Sarr: The World Bank

No DT/2018/11, Working Papers from DIAL (Développement, Institutions et Mondialisation)

Abstract: This paper uses a novel matched employer-employee data set representing the formal sector in Bangladesh to provide descriptive evidence of both the relative importance of cognitive and non-cognitive skills in this part of the labor market and the interplay between skills and hiring channels in determining wages. While cognitive skills (literacy, a learning outcome) a ect wages only by enabling workers to use formal hiring channels, they have no additional wage return. Non-cognitive skills, on the other hand, do not a ect hiring channels, but they do enjoy a positive wage return. This wage return di ers by hiring channel: those hired through formal channels bene t from higher returns to openness to experience, but lower returns to conscientiousness and hostile attribution bias. Those hired through networks enjoy higher wages for higher levels of emotional stability, but they are also punished for higher hostile attribution bias. This is in line with di erent occupational levels being hired predominantly through one channel or the other. We provide suggestive evidence that employers might use hiring channels di erently, depending on what skill they deem important: employers valuing communication skills, a skill that could arguably be observed during selection interviews, are associated with a larger within- rm wage gap between formal and network hires, while the importance of teamwork, a skill that is more dicult to observe at the hiring stage, is associated with a smaller wage gap.

Keywords: cognitive skills; personality traits; networks; matched worker- rm data; Bangladesh (search for similar items in EconPapers)
JEL-codes: J24 J31 J71 O12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hrm and nep-neu
Date: 2018-05
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http://www.dial.ird.fr/media/ird-sites-d-unites-de ... travail/2018/2018-11 First version, 2018 (application/pdf)

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