The Impact of Non-Cognitive Ability on the Performance of the Labor Market

Abstract

In this paper, we estimate the impact of non-cognitive ability on the labor market performance in Korea using Korean Labor and Income Panel Study (KLIPS) data. Non-cognitive ability is measured by ‘self-esteem’ and ‘locus of control’ scores. Our findings are as follows. First, the rate of return to education is still estimated to be substantial, but somewhat smaller, when non-cognitive ability is controlled for in the estimation. Specifically, one additional year of college education is estimated to raise wages by three to ten percent. Second, the higher one’s education, the higher one’s self-esteem and the more strongly one believes that he or she is in control of their own life. Third, non-cognitive ability has a significant impact on wages even after controlling for sex, age, education level, tenure, size of the establishment, occupation and industry. The estimated impact of one standard deviation increase on the ‘self-esteem’ score and on the ‘locus of control’ score are comparable to that of 1.5 years and 0.5 years of college education, respectively. Accordingly, the contents as well as the methodologies of general education need to be reconsidered to foster the non-cognitive abilities of the students.