6.1 Socioemotional Skills Differ Based on Educational Attainment

FIGURE 6.1 Socioemotional Skills Differ Based on Educational Attainment

Source: data of the 2013 Pakistan labor and Skills Survey (lSS) and 2012 Sri lanka Skills toward Employment and Productivity (STEP).

traits such as emotional stability and self-esteem, even after controlling for cognitive skills, significantly increase the probability of completing more advanced studies. In the United Kingdom, extroversion and conscientiousness have a positive impact on educational attainment (Lenton 2014). Conscientiousness is also the best predictor of grades and the second-best predictor of years of education, and openness to experience is the best predictor of years of education (Borghans, ter Weel, and Weinberg 2006). The differences in the level of conscientiousness by educational attainment are statistically significant only in Sri Lanka, whereas openness to experience is significant in both Pakistan and Sri Lanka.

Socioemotional skills are correlated with earnings. The relationships may be either direct or indirect and may depend on the sociocultural contexts of the economies. If the relationship is direct, the implication is that individuals with higher socioemotional skills are more productive. If the relationship is indirect, the implication is that individuals with higher socioemotional skills decide to invest in schooling and work experience, which are valued more highly in the labor market and exhibit higher returns.7

In Pakistan, extroversion is positively correlated with monthly earnings, which indicates that workers with higher social skills are likely to fare better in navigating a cultural context where job matching relies on interpersonal relationships. Similar associations were seen in the United Kingdom, where more sociable and assertive people are 25 percent more likely to be employed in high-earning jobs, though the returns are higher among men than women, reflecting social norms around sex (Heineck 2011). Earnings in Pakistan are also correlated with openness to experience and innovation, which is in line with the conclusions of Acosta, Muller, and Sarzosa (2020) on Colombia.

However, in the labor markets in both Sri Lanka and Pakistan, the relationship between socioemotional skills and earnings varies based on whether the sector of employment is formal or informal. Among formal sector wage workers in Pakistan, extroversion and agreeableness are negatively correlated with earnings (figure 6.2). This echoes findings in the Netherlands, where workers who are extroverted or agreeable are likely to earn less. One reason for this outcome may be that agreeable people are poor wage negotiators or that they self-select into jobs that are often low-paying (Nyhus and Pons 2005). In contrast to the case in Pakistan, agreeableness is positively correlated with earnings among formal sector workers in Sri Lanka, which implies that high levels of kindness and compliance are considered important in career success (de Vries and Rentfrow 2016). Among informal wage workers, conscientiousness is positively correlated with earnings in Pakistan, while, in Sri Lanka, emotional stability has a positive correlation. This finding is in line with experiences in other countries (Almlund et al. 2011; Heckman, Stixrud, and Urzua 2006; Nyhus and Pons 2005).

Socioemotional skills are rewarded differently in the formal and informal sectors, but this may also imply that the types of jobs available in these sectors require distinct abilities (figure 6.3). In Pakistan, formal sector workers show more hostility bias whereby they perceive others to be more hostile toward them. This suggests that competitiveness is more rewarding in the formal sector than in the informal sector. In Sri Lanka, the