Study investigates how non-cognitive skills relate to the relative labor market performance of immigrants

How do immigrants' non-cognitive talents affect their employment integration?


Follow us onFollow Tech Explorist on Google News

According to the conventional model of economic integration, immigrants’ success depends on their ability to learn skills specific to their host country through formal education in schools and to retrain, learn the language, become accustomed to the local way of life, and gain knowledge of the local labor market. As they gain experience in their new country, immigrants who initially arrive with a certain level of human capital may eventually achieve labor market outcomes comparable to natives.

A recent study examined the relationship between immigrants’ relative labor market performance and non-cognitive talents. This investigation focuses on how immigrants’ non-cognitive talents affect their employment integration throughout their lives. To do so, scientists first combine two lines of research: the impact of immigrants’ labor market integration in a host nation and the return of non-cognitive skills on the employment outcomes of individuals.

The majority of prior research has shown that, when compared to comparable natives, immigrants of both the first and second generations have fared poorly in the German job market. The research on immigrants’ integration in Germany places a lot of emphasis on the relative salaries of immigrants. According to these findings, the wages of immigrants do not catch up to those of natives.

The German Socio-Economic Panel (SOEP) and the Five-Factor Model of personality were used as proxies for non-cognitive skills. Scientists discovered that these skills are essential for immigrants’ integration into the local labor market. The Five-Factor Model is a widely used tool to assess non-cognitive abilities and is frequently used in empirical research to assess personality at its broadest level.

Scientists pay particular attention to people’s employment outcomes. For instance, those who score highly on the majority of these traits participate more, put in longer hours and experience shorter unemployment periods, have lower unemployment probabilities, are less dependent on the state for their unemployment, engage in less workplace deviance, have stronger leadership qualities, and perform better at their jobs.

On average, Germany has a slow but continuous process of integration. In Germany, full integration will likely take between 25 and 30 years. Throughout their lifetime, immigrants have a disadvantage in employment probability of about 9.6 percentage points. Immigrants can fully attain the typical native’s employment probability level if they score highly on extroversion, emotional stability, conscientiousness, and openness to experience.

The difference in their mean lifetime employment probability is smaller by 5 to 15 percentage points. On the other hand, immigrants with high agreeableness scores either don’t notice any difference or see it marginally increase.

When natives and immigrants are compared on the same types and levels of non-cognitive skills, it becomes clear that immigrants exhibit larger returns to extroversion and, to a lesser extent, openness to new experiences. Immigrants who perform well in these non-cognitive skills integrate better and have differences in lifetime employment probability that are, on average, 3-5 percentage points smaller.

Scientists concluded, “the non-cognitive skills are ‘substitutes’ for the standard human capital measures used to capture labor market skills as they are only operating in the integration process of immigrants with a low level of education.”

“This paper suggests the first evidence of how the non-cognitive skills of immigrants relate to their labor market success in the host country. The results have important methodological and policy implications. First, the results suggest that the standard economic integration model, which is mainly based on standard human capital measures, should be enhanced to cover non-cognitive dimensions of immigrants’ skills. Second, immigrants might be discouraged from operationalizing their non-cognitive skills due to negative sentiments or discrimination in the labor market.”

Journal Reference:

  1. Akay A, Yilmaz L (2023) Non-cognitive skills and labor market performance of immigrants. PLoS ONE 18(5): e0281048. DOI: 10.1371/journal.pone.0281048