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[2N02] Labor market returns to Vocational Education and Non-Cognitive Skills in Indonesia

*Seonkyung CHOI¹ (1. Hiroshima University)

Keywords:vocational education, non-cognitive skills, labor market outcomes, Indonesia

Economic studies of the impact of education on labor market outcomes have focused mainly on years of education and cognitive skills, linking them to future earnings. More recently, however, social scientists have started to argue that personal traits or non-cognitive skills are also important for determining productivity (and hence earnings), especially in developing countries where the predominance of the informal economy requires prompt reasoning, judging, imagining, problem-solving and communications skills. The most commonly used indicators of non-cognitive skills are the “Big Five” personality traits (openness to experience, conscientiousness, extraversion, agreeableness and neuroticism). Indonesia has a rapidly growing economy but still relatively high youth unemployment, a relatively low proportion of women in the labor force, and a very high share of the economy is informal. In this context, we will analyze the returns to different education levels, focusing particularly on upper secondary general and vocational education, the relationships between non-cognitive skills and earnings, and the relationship among education, non-cognitive skills and earnings, in all cases comparing both men and women and comparing different job sectors, formal and informal. We will use the ordered Heckman method with data from the Indonesia family life survey (IFLS).