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Individualism, Human Capital Formation, and Labor Market Success

Katharina Hartinger (), Sven Resnjanskij (), Jens Ruhose () and Simon Wiederhold ()
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Katharina Hartinger: Catholic University of Eichstätt-Ingolstadt
Sven Resnjanskij: CESifo

No 14820, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: There is an ongoing debate about the economic effects of individualism. We establish that individualism leads to better educational and labor market outcomes. Using data from the largest international adult skill assessment, we identify the effects of individualism by exploiting variation between migrants at the origin country, origin language, and person level. Migrants from more individualistic cultures have higher cognitive skills and larger skill gains over time. They also invest more in their skills over the life-cycle, as they acquire more years of schooling and are more likely to participate in adult education activities. In fact, individualism is more important in explaining adult skill formation than any other cultural trait that has been emphasized in previous literature. In the labor market, more individualistic migrants earn higher wages and are less often unemployed. We show that our results cannot be explained by selective migration or omitted origin-country variables.

Keywords: cognitive skills; culture; individualism; labor market; international comparisons (search for similar items in EconPapers)
JEL-codes: D91 I20 J24 Z13 (search for similar items in EconPapers)
Pages: 96 pages
Date: 2021-10
New Economics Papers: this item is included in nep-edu, nep-lma and nep-neu
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