Education, Labour Market Experience and Cognitive Skills

Abstract

This paper examines how formal education and experience in the labour market correlate with measures of human capital available in The Survey of Adult Skills, a product of the OECD Programme for the International Assessment of Adult Competencies (PIAAC). The findings are consistent with the notion that, in producing human capital, work experience substitutes formal education at the bottom of the schooling distribution. First, the number of years of working experience correlates with literacy proficiency only among low-educated individuals. Secondly, low-educated workers who only perform simple tasks on their jobs (calculating percentages or reading emails) do better in numeracy and literacy tests than similar employees who did not perform those tasks. Thirdly, workers in jobs intensive in numeric tasks perform relatively better in the numeracy section of the PIAAC test than in the literacy part. Overall, our results suggest that the contribution of on-the-job learning to skill formation is about a third of that of compulsory schooling in most of the countries that participated in PIAAC.