Arnold Kling  

PSST and Long-term Unemployment, 2

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Richard Florida weighs in.


The returns to analytical skill rise consistently across the skill distribution; moving from the 25th to the 75th percentile increases earnings by more than $25,000. The same basic pattern holds for social intelligence skills, like teamwork, communication, people management, and so forth; moving from the 25th to the 75th percentile increases wages by nearly $35,000. But physical skill is different, registering decreasing returns. Moving from the 25th to the 75th percentile lowers earnings by $13,600.

Thanks to Alex Tabarrok for the pointer.

My interpretation of the graphs is that the correlation between occupational wages and occupational requirements for analytical skills is strongly positive, as is the correlation between occupational wages and occupational requirements for social skills. However, the correlation between occupational wages and occupational requirements for physical skills is weaker and is negative.

This is an instance in which bivariate correlations are difficult to interpret. I think the dataset cries out for a multiple regression of occupational wages on the three skill components. I would hope that with multiple regression the correlation between wages and required physical skills would be positive, controlling for everything else. The negative correlation would be difficult to explain on an all-else-equal basis.

It would be interesting also to see how these relationships have changed over time.


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COMMENTS (5 to date)
Podunk writes:

While I would suspect that the correlation is positive, controlling for social and analytical skills, that relies on an implicit assumption that a job requiring more physical skills naturally commands a premium. I'm not sure this is valid. Consider the similar case of jobs that require more 'disgusting' work (septic cleaning, for instance). I don't have the impression that these are more remunerative than jobs that require similar skills but are less disgusting. Why is that? Wouldn't you require more money to do a distasteful job? I would.

It may instead be that workers who cannot command high wages for non-skills related reasons (criminal records, poor work habits, etc.) are also unable to obtain jobs that are less distasteful or require fewer physical skills. These may or may not be correlated with fewer social or analytical skills, but I'm not sure we can assume that those two variables would capture enough of the differences to shift the correlation from negative to positive.

frankcross writes:

I presume it is because those with physical skills didn't develop the other skills, perceiving them unnecessary.

But I'm curious about the high school dynamic. The guys with great physical skills are the athletes. Spoiled, get all the girls. See no need to develop intelligence or social skills because they don't have to do so to be atop the pyramid. Others do to try to compete.

Hugh writes:

May I add another level of complication to this analysis?

In part the changing patterns of employment reflect the offshoring of manufacturing jobs. The USA is still consuming the fruits of physical work, but that work is being performed in China.

To understand the true change in work patterns you would need to correct for this effect.

I have no idea how.

Jake Russ writes:

I put a link in my name to the research Richard Florida is referring to at MPI.

The link is to the working paper as of April 2010. It is without tables so I can't say for sure, but it reads like they did run the regressions you want to see Arnold. Maybe there is an updated version somewhere.

They describe the coefficient on physical skills to be negative but not statistically significant.

Joe in Morgantown writes:

Are the physical skills controlled for age? Are we just seeing that young people--- although fit--- don't produce as much?

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