Cognitive Skills in the US Labor Market For Whom Do They Matter

The resource examines PIAAC survey data, “the most comprehensive initiative to collect cognitive skills data across countries” which tested adults in 24 countries on “literacy, numeracy, and problem-solving in technology-rich environments” in 2011-2012 and collected information about these adults’ employment and salary information (p.3).

The authors explain that they use this “rich, new source of data to reexamine the respective roles of cognitive skills, problem-solving skills, years of schooling and other factors in determining earnings within the U.S.” (p.2). The resource centers on the following questions:

• “How do the results of tests of cognitive skills vary across and within educational levels?

 • “Do cognitive skills affect earnings, over and above the effects of educational attainment?

 • “Does educational attainment still influence earnings, after taking account of cognitive skills?

• “Which cognitive skills—math, reading, or problem-solving—matter most?

• “Does the influence of cognitive skills come entirely from helping people get into high pay occupations or do   differences in cognitive skills affect earnings differences within fields?

• “Does the role of cognitive skills in affecting earnings differ for men and women?” (p.2-3).

(Abstractor: Author and Website Staff)

Overall, the authors find that “the measured levels of skill proficiency in the U.S. are low relative to those in many other OECD countries. Low proficiency in literacy, numeracy and problem-solving can be found in all demographic groups – young and old, male and female, native-born as well as immigrant, and even at higher rungs on the educational and occupational ladders” (p.11). The resource also highlights several other more detailed findings: • “The market generates quite strong rewards to literacy, problem-solving and especially numeracy proficiency. These returns can be found for all demographic groups, for those with low as well as high educational attainment, and in virtually every occupational group” (p.11-12). • “The gains associated with reading and math proficiency vary widely across groups of workers. Older workers see the highest returns to numeracy while younger workers gain more from literacy. U.S.-born workers benefit a great deal from enhanced numeracy, even after controlling for education. Foreign-born workers see no benefit, once [the authors] take account of educational level. • “The effect of educational attainment on earnings leaves a great deal of earnings variation linked to proficient and high levels of numeracy and literacy. The patterns differ by educational level. Workers with ’some college’ see no significant earnings increases with higher levels of cognitive skills. But those with no more than a high school diploma experience markedly higher earnings when they are proficient in literacy and numeracy…Numeracy skills are especially important for those with BA degrees. Over one in three (37 percent) of BAs are at the lowest proficiency in numeracy. The regression results suggest that raising these workers to proficient in numeracy would raise their earnings by $800 per month in added earnings. • “Cognitive skills raise earnings among those with the same occupation, but not in all cases. For managers and professionals and for craft workers and machine operators, the gain comes from reaching proficient levels of numeracy. For technical and associate professions, added proficiency in literacy is valuable. But, for clerical, sales, laborers, and service workers, higher cognitive skills exert little impact on earnings” (p.12). (Abstractor: Author and Website Staff)

• Last Updated:
• Created:
• Resource Publication Date: 2015
• Author(s): Holzer, Harry J. and Lerman, Robert I.
• Organizational Author(s): American Institutes for Research
• Funding Source: U.S. Department of Education
• Resource Availability: Publicly available
• Posted by: Wesley Peterson
• Posted in: Workforce System Strategies