Cognitive and socio-emotional skills play important but different roles in explaining labor market productivity and success. Despite some limitations in the data and measurements used, policymakers would be well advised to include cognitive socio-emotional skills development in school curricula. Promoting each skill set could lead to improvements in job quality or higher labor market participation and tertiary educational attainment. Given the influence of family environments on skill formation, parenting and extra-curricular activities can be very important in fostering cognitive and socio-emotional skills.
Economists have long considered educational levels to be the main indicator of skills. However, it is now well recognized that common proxies such as years of education do not appropriately reflect cross-country differences in skills acquisition, or how they impact the labor market. International assessments of students' and adults' skills show great disparities across similar educational levels, suggesting that years of education attained only partially reflects people's abilities.
Instead, people should be distinguished by the broad sets of abilities, accumulated over one's lifetime, that shape their decisions and success in the labor market. In that sense, a large body of evidence has documented that direct measures of skills provide more adequate estimations of the differences in individuals' potential productive capacity than is provided by the quantity of education they receive. Around the world, employers place high on skills needed for emerging jobs (i.e. those associated with high use of technology, or involving substantial human interaction), which typically involve non-routine analytical tasks.
One noteworthy fact from the economic and psychology literature discussing skills is the plethora of definitions and taxonomies surrounding this concept. These days, the term "skills" is used broadly to include competencies, attitudes, beliefs, and behaviors that are malleable (modifiable) across an individual's development and can be broadly divided into two main categories : 1) cognitive skills - aptitudes to perform mental tasks such as comprehension or reasoning; and 2) socio-emotional skills - personality traits, behaviors, attitudes, and beliefs. Technical skills, associated with the specific knowledge needed to carry out one's occupation, can be thought of as a subset of cognitive skills.
*** The term "socio-emotional skills" refers to a distinct set of skills that enable individuals to navigate interpersonal and social situations effectively.
These skills encompass behaviors and attitudes that are consistent patterns of thoughts, feelings, and conduct (such as commitment, discipline, or the ability to work in a team) and personality traits (such as self-confidence, perseverance, and emotional stability), which are broad facets that are relatively stable over time. (...) In the economic literature, the term "socio-emotional skills" is often used interchangeably with terms such as "behavioral skills," "life skills," "non-cognitive skills," or "soft skills." Nonetheless, these terms differ slightly and therefore merit clarification. "Non-cognitive skills" refers to a broad range of behaviors, abilities, and traits that are not induced by intelligence or achievement. "Soft skills" and "life skills" usually include more technical skills such as language fluency and computer literacy. Psychologists argue that many of the abilities and traits that economists intend to capture with the term "non-cognitive skills" are in fact a result of cognition.
(...) Indeed, the high value that surveys show is placed on socio-emotional and advanced cognitive skills by employers may reflect a decline in the relative number of jobs that require manual labor, and an increase in those that require non-routine analysis and independent reasoning.
Discussion of pros and cons
The role of skills and traits in labor earnings
Since the mid-1990s, studies have shown that both cognitive skills and socio-emotional skills affect the labor earnings of the overall population, although cognitive skills are shown to have relatively larger effects.
In the US, cognitive abilities have long been the dominant factor determining labor earnings. A large number of studies have shown that higher levels of cognitive skills (as measured by IQ or standardized tests of mathematics, reading, and vocabulary) predict higher wages, even when taking into account other factors that might also influence earnings. (...)
In response to more recent findings from program experiments and employer surveys, studies have begun to account for measures of socio-emotional skills, in addition to cognitive ones, in order to investigate their influence on labor earnings. This burgeoning literature reveals that socio-emotional skills are at least as important as cognitive skills in determining labor earnings in many high-income countries, such as the US, Germany, the Netherlands, Sweden, Canada, and the UK. Despite these findings, many other recent studies continue to suggest that raising cognitive skills outweighs raising socio-emotional skills in terms of increasing income in most countries, and especially in Nordic countries and Switzerland. Among the so-called "big five personality traits" used in the majority of empirical studies (openness to experience, conscientiousness, extraversion, agreeableness, and emotional stability), conscientiousness and traits related to emotional stability (locus of control, i.e. the extent to which individuals believe they have control over their lives, and self-esteem) are the most associated with job performance and wages in the US and countries in Western Europe. Using measures of socio-emotional skills based on school evaluations, positive and significant associations between discipline (as evaluated by teachers) in childhood and adult wages were found in the UK and the US.
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