Mar 9 2018

The role of cognitive skills and formal education in explaining adult employment

What matters most for adult employment – is it cognitive skills or formal education? The answer depends on which country we are looking at.

The main task of a new NIFU report is to analyse the relationships between cognitive skills, formal education and employment in the 31 countries covered by the OECD’s PIAAC survey (Programme for the International Assessment of Adult Competencies).

This is the first report from the ‘Silver-lining’ project. Silver Lining – A Study of Employability and Learning Trajectories of Late Career Learners addresses the issue of the ageing Norwegian workforce by examining the relationship between education or learning, and the active participation of older adults in the workforce.

The report presents a classification of some significant aspects of the labour market regulation in the 31 countries according to some basic principles. The labour market classification is made separately for each country, gender and age group.

Some findings:

  • The labour market in the Nordic countries (Sweden, Denmark, Finland and Norway) appears to be based on meritocratic selection even for senior workers of both genders.
  • In many Southern and Eastern European countries formal education often plays a pivotal role in the selection to work.
  • While the labour market for females appears as hybrid or segmented, the labour market for men points in the direction of being meritocratic or hybrid in most countries.
  • The labour market in huge modern economies such as Japan and Korea are basically classified as residual. In these countries neither skills nor formal education predict employment.
  • The health condition, immigrant status, marital status and other aspects of one’s life situation are pivotal variables for predicting and understanding labour market participation in most countries, especially for the oldest workers.

If we assume that the labour market has the capacity to absorb more people with better skills and / or higher formal education, meritocratic regimes can increase employment among adults by implementing measures that improve the level of skills among unemployed and those outside the workforce.

The formal level of education in all countries is positively associated with skills. Therefore, focusing on more education will be a plausible measure together with more and better training at the workplace. However, where credentials appear as a selection criterion, it becomes important to certify the training.

At the same time, the analyses show that health is an important factor for employment. To keep seniors working, it is therefore important to facilitate work for people who experience health problems, but effective facilitation probably requires a form of public regulation or subsidizing of the market.

However, if the labour market does not have the capacity to absorb more people, as formal competence and skills increase in the population, such an effort as indicated above will shift employment problems upward in the education and skills hierarchy.

NIFU Report 2017:19

For more information, contact
Jens Brandi Grøgaard, Research Professor
(+47) 454 82 358