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Author: Sanders, Carl
Resulting in 2 citations.
1. Sanders, Carl
Reading Skills and Earnings: Why Do Doing Words Good Hurt You’re Wages?
Presented: Montreal, Society of Labor Economics World Meeting, June 2015.
Also: http://www.sole-jole.org/15504.pdf
Cohort(s): NLSY79
Publisher: Society of Labor Economists (SOLE)
Keyword(s): Armed Services Vocational Aptitude Battery (ASVAB); Earnings; Wage Penalty/Career Penalty; Wage Theory

Permission to reprint the abstract has not been received from the publisher.

In a reading comprehension test administered to American youth in 1980 by the National Longitudinal Survey, a one standard deviation increase in reading scores is associated with a 1.5% decrease in later wages after conditioning on the youths' other scores on math, science, and personality tests. This goal of this paper is to explain this negative conditional relationship between the reading test score and wages, which I call the reading penalty. In the first section of the paper, I consider and reject a number of statistical objections to the existence of the reading penalty. In the second section, I construct a simple generalized Roy model that offers two distinct economic explanations for the reading penalty. The first explanation is the starving artist, where reading skills are a proxy for preferences for low-wage jobs, while the second is the bad sign, where high reading test scores proxy for a lack of other productive attributes. In the final section, I use the NLSY data and the identification from the model to determine which economic explanation of the reading penalty is most plausible. I find weak support for the starving artist hypothesis. On the other hand, I find evidence in favor of the bad sign explanation: higher reading comprehension scores may signal a lack of organizational skills.
Bibliography Citation
Sanders, Carl. "Reading Skills and Earnings: Why Do Doing Words Good Hurt You’re Wages?" Presented: Montreal, Society of Labor Economics World Meeting, June 2015.
2. Sanders, Carl
Skill Uncertainty, Skill Accumulation, and Occupational Choice
Presented: Chicago IL, Society of Labor Economists Annual Meetings, May 2012
Cohort(s): NLSY79
Publisher: Society of Labor Economists (SOLE)
Keyword(s): Occupational Choice; Occupational Information Network (O*NET); Occupations; Skills

Permission to reprint the abstract has not been received from the publisher.

Workers entering the labor market are uncertain about their skill set. Standard human capital theory assumes workers have perfect information about their skills. In this paper, I argue that skill uncertainty can explain one type of worker moves that standard human capital theory cannot: moves between jobs where they perform different kinds of tasks. I consider workers who have a multi-dimensional bundle of labor market skills and begin their careers uncertain about their skill levels. I construct a model that links learning about skills to the tasks performed in jobs: the more intensely a job uses a particular skill, the more the workers learn about their true level of that skill. The model also contains a skill accumulation motive: as workers use a skill they gain additional amounts of it. A simplified version of the model suggests that if skill uncertainty were the dominant force workers would switch between jobs that use skills in different ratios but similar total levels. On the other hand, if skill accumulation were the dominant force they would switch between jobs that use similar ratios of skills but higher total levels. Linking data on workers from the National Longitudinal Study of Youth 1979 with occupational characteristics from the US Department of Labor O*NET database, I show that worker mobility across different task mixes is common and I estimate the model parameters. The current results indicate that skill uncertainty explains approximately 30% of worker mobility across different task ratios.
Bibliography Citation
Sanders, Carl. "Skill Uncertainty, Skill Accumulation, and Occupational Choice." Presented: Chicago IL, Society of Labor Economists Annual Meetings, May 2012.