The Skills of Rich and Poor Country Workers

Slichter, David and Taveras, Elisa and Monge, Daniela (2021): The Skills of Rich and Poor Country Workers.

Abstract

We use information on the occupation choices and earnings of immigrants to measure differences in specific skills between workers from rich and poor countries. We have several findings. First, the skills which rich country workers specialize in mirror the skills which high-income individuals specialize in. Second, rich country workers have the greatest advantage in skills related to the ability to generate ideas (like creativity and critical thinking) rather than scientific or technical knowledge. Third, the skills in which rich country workers have the greatest advantage align closely with the skills used in management occupations. Fourth, workers from rich countries are more varied in their skills (e.g., what one Canadian is good at is different from what another Canadian is). These findings do not appear to be accounted for by the non-randomness of immigration or mismeasurement of skills. Overall, our results suggest that rich country workers have skills particularly well-adapted to production processes involving the coordinated efforts of large groups of people.

• Item Type: MPRA Paper
• Language: English
• Keywords: skills, immigration, development
• Subjects: J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration

References

Arkolakis, C., Ramondo, N., Rodriguez-Clare, A., and Yeaple, S. (2018). Innovation and production in the global economy. American Economic Review, 108(8), 2128-73.

Barro, R.J. (1991). Economic Growth in a Cross Section of Countries, Quarterly Journal of Economics, 106(2), 407-443.

Barro, R. J., and McCleary, R. (2003). Religion and economic growth, American Sociological Review, 68(5), 760-781.

Bils, M. and P.J. Klenow (2000). Does Schooling Cause Growth?, American Economic Review, 90(5), 1160-1183.

Blair, P.Q. and B.W. Chung (2020). A Model of Occupational Licensing and Statistical Discrimination, AEA Papers and Proceedings, forthcoming.

Bloom, N., Eifert, B., Mahajan, A., McKenzie, D., and J. Roberts (2013). Does Management Matter? Evidence from India, Quarterly Journal of Economics, 128(1), 1-51.

Borjas, G.J. (1987). Self-selection and the earnings of immigrants, American Economic Review, Vol. 77, No. 4, pp. 531-553.

Borjas, G.J. (1992). Ethnic Capital and Intergenerational Mobility, Quarterly Journal of Economics, 107(1), 123-150.

Bratsberg, B. and D. Terrell (2002). School Quality and Returns to Education of U.S. Immigrants, Economic Inquiry, 40(2), 177-198.

Cantrell, J. A. (1992). A comparison of cognitive ability measures in the prediction of achievement in a referred population of college students, The Ohio State University.

Caselli, F. (2005). Accounting for cross-country income differences. Handbook of economic growth, 1, 679-741.

Chiswick, B.R. (1978). The Effect of Americanization on the Earnings of Foreign-born Men, Journal of Political Economy, 86(5), 897-921.

De Philippis, M. and Rossi, F. (2020). Parents, schools and human capital differences across countries. Journal of the European Economic Association, forthcoming.

Deming, D. and L.B. Kahn (2018). Skill Requirements across Firms and Labor Markets: Evidence from Job Postings for Professionals, Journal of Labor Economics, 36(S1), S337-S369.

Department of Homeland Security (2019). Estimates of the Lawful Permanent Resident Population in the United States and the Subpopulation Eligible to Naturalize: 2015-2019. DHS Office of Immigration Statistics.

Department of Homeland Security (2018). Illegal Alien Population Residing in the United States: January 2015. DHS Office of Immigration Statistics.

Department of Homeland Security (2018). Nonimmigrants Residing in the United States: Fiscal Year 2016. DHS Office of Immigration Statistics.

DiNardo, J.E. and J. Pischke (1997). The Returns to Computer Use Revisited: Have Pencils Changed the Wage Structure Too?, Quarterly Journal of Economics, 112(1), 291-303.

Dustmann, C. and Glitz, A. (2011). Migration and education. In Handbook of the Economics of Education, 4, 327-439. Elsevier.

Dustmann, C. and C. Meghir (2005). Wage, Experience and Seniority, Review of Economic Studies, 72(1), 77-108.

Fulford, S.L., Petkov, I., and F. Schiantarelli (2020). Does it matter where you came from? Ancestry composition and economic performance of US counties, 1850-2010. Journal of Economic Growth, 25(3), 341-380.

Gardner, H. (1983). Frames of Mind: The Theory of Multiple Intelligences, New York: Basic Books.

Giorcelli, M. (2019). The Long-Term Effects of Management and Technology Transfers, American Economic Review, 109(1), 121-152.

Guvenen, F., Kuruscu, B., Tanaka, S. and D. Wiczer (2020). Multidimensional Skill Mismatch, American Economic Journal: Macroeconomics, 12(1), 210-44.

Hanushek, E.A. and D.D. Kimko (2000). Schooling, Labor-Force Quality, and the Growth of Nations, American Economic Review, 90(5), 1184-1208.

Hanushek, E.A. and L. Woessmann (2008). The Role of Cognitive Skills in Economic Development, Journal of Economic Literature, 46(3), 607-668.

Hanushek, E.A. and L. Woessmann (2012). Do Better Schools Lead to More Growth? Cognitive Skills, Economic Outcomes, and Causation, Journal of Economic Growth, 17, 267-321.

Heckman, J.J. (2008). Schools, Skills, and Synapses, Economic Inquiry, 46(3), 289-324.

Heckman, J.J., Jagelka, T. and Kautz, T. D. (2019). Some contributions of economics to the study of personality (No. w26459). National Bureau of Economic Research.

Hendricks, L. (2002). How Important is Human Capital for Development? Evidence from Immigrant Earnings, American Economic Review, 198-219.

Hendricks, L. and T. Schoellman (2018). Human Capital and Development Accounting: New Evidence from Wage Gains at Migration, Quarterly Journal of Economics, 133(2), 665-700.

Hidalgo, C. A., and Hausmann, R. (2009). The building blocks of economic complexity. Proceedings of the national academy of sciences, 106(26), 10570-10575.

Hsieh, C. T. and P.J. Klenow (2009). Misallocation and Manufacturing TFP in India and China. Quarterly Journal of Economics, 124(4), 1403-1448.

Hsieh, C. T. and P.J. Klenow (2010). Development accounting. American Economic Journal: Macroeconomics, 2(1), 207-23.

Jones, B.F. (2014). The Human Capital Stock: A Generalized Approach, American Economic Review, 104(11), 3752-3777.

Jones, C. I., and Romer, P. M. (2010). The new Kaldor facts: ideas, institutions, population, and human capital. American Economic Journal: Macroeconomics, 2(1), 224-45.

Kambourov, G. and I. Manovskii (2009). Occupational Specificity of Human Capital, International Economic Review, 50(1), 63-115.

Kinsler, J. and R. Pavan (2015). The Specificity of General Human Capital: Evidence from College Major Choice, Journal of Labor Economics, 33(4), 933-972.

Kirkeboen, L.J., Leuven, E., Mogstad, M. (2016). Field of Study, Earnings, and Self-Selection. Quarterly Journal of Economics, 131(3), 1057-1111.

Klenow, P.J. and A. Rodriguez-Clare (1997). The Neoclassical Revival in Growth Economics: Has It Gone Too Far?, NBER Macroeconomics Annual 1997, 12, ed. by Ben S. Bernanke and Julio Rotemberg. Cambridge: MIT Press.

Lagakos, D., Moll, B., Porzio, T., Qian, N., and T. Schoellman (2018a). Life Cycle Wage Growth across Countries, Journal of Political Economy, 126(2), 797-849.

Lagakos, D., Moll, B., Porzio, T., Qian, N., and T. Schoellman (2018b). Life-Cycle Human Capital Accumulation across Countries: Lessons from US Immigrants, Journal of Human Capital, 12(2), 305-342.

Li, Y., and Rama, M. (2015). Firm dynamics, productivity growth, and job creation in developing countries: The role of micro-and small enterprises. The World Bank Research Observer, 30(1), 3-38.

Lise, J., Postel-Vinay, F. (2020). Multidimensional Skills, Sorting, and Human Capital Accumulation. American Economic Review, forthcoming.

Mankiw, N.G., Romer, D., and D.N. Weil (1992). A Contribution to the Empirics of Economic Growth, Quarterly Journal of Economics, 107(2), 407-437.

Manuelli, R.E. and A. Seshadri (2014). Human Capital and the Wealth of Nations, American Economic Review, 104(9), 2736-2762.

Neal, D. (1995). Industry-Specific Human Capital: Evidence from Displaced Workers, Journal of Labor Economics, 13(4), 653-677.

Oreopoulos, P. (2011). Why Do Skilled Immigrants Struggle in the Labor Market? A Field Experiment with Thirteen Thousand Resumes. American Economic Journal: Economic Policy, 3(4), 148-171.

Pagano, P. and F. Schivardi (2003). Firm Size Distribution and Growth, Scandinavian Journal of Economics, 105(2), 255-274.

Paglin, M., Rufolo, A. M. (1990). Heterogeneous Human Capital, Occupational Choice, and Male-Female Earnings Differences. Journal of Labor Economics, 8(1), 123-144.

Patel, K. and F. Vella (2013). Immigrant Networks and Their Implications for Occupational Choice and Wages. Review of Economics and Statistics, 95(4), 1249-1277.

Plomin, R. (2019). Blueprint: How DNA Makes Us Who We Are, MIT Press.

Poschke, M. (2018). The firm size distribution across countries and skill-biased change in entrepreneurial technology. American Economic Journal: Macroeconomics, 10(3), 1-41.

Roy, A.D. (1951). Some Thoughts on the Distribution of Earnings, Oxford Economic Papers, 3(2), 135-146.

Ruggles, S., Flood, S., Goeken, R., Grover, J., Meyer, E., Pacas, J. and Sobek, M. (2020). IPUMS USA: Version 10.0 [dataset]. Minneapolis: IPUMS, 2020. https://doi.org/10.18128/D010.V10.0

Schoellman, T. (2010). The Occupations and Human Capital of U.S. Immigrants, Journal of Human Capital, 4(1), 1-34.

Schoellman, T. (2012). Education Quality and Development Accounting, Review of Economic Studies, 79(1), 388-417.

Schumpeter, J. (1942). Creative destruction. Capitalism, socialism and democracy, 825, 82-85.

Slichter, S. (1950). Notes on the Structure of Wages, Review of Economics and Statistics, 32, 80-91.

Spearman, C. (1904). "General Intelligence," Objectively Determined and Measured, American Journal of Psychology, 15(2), 201-292.

Solow, R.M. (1956). A Contribution to the Theory of Economic Growth, Quarterly Journal of Economics, 70(1), 65-94.

Symeonidis, G. (1996). Innovation, Firm Size and Market Structure: Schumpeterian Hypotheses and Some New Themes, OECD working paper No. 161.

Tabellini, G. (2010). Culture and Institutions: Economic Development in the Regions of Europe, Journal of the European Economic Association, 8(4), 677-716.

Tybout, J.R. (2000). Manufacturing Firms in Developing Countries: How Well Do They Do, and Why? Journal of Economic Literature, 38, 11-44.

Waldinger, R. (1994). The Making of an Immigrant Niche, International Migration Review, 28(1), 3-30.