The Importance of Cognitive and Social Skills for the Duration of Unemployment

The present study analyses the role that human capital in childhood plays for the duration of an unemployment spell in adolescence and early adulthood. It thus asks the question how early in life we can detect skills that will be important for the probability of finding employment later in life. In particular, it analyses not only the relevance of cognitive skills, but also explores the importance of social skills, being a further dimension of human capital that might be targeted by policy measures. The empirical analysis builds on data from the National Child Development Study, a cohort study based on all individuals born in Great Britain in a single week in March 1958. As a measure for social skills, I rely on teacher ratings of children's behaviour using the Bristol Social Adjustment Guides. In addition, four tests administered to the children in school are used to measure cognitive skills. The results show that higher cognitive and social skills at the age of 7 are associated with an increased probability of making a transition from unemployment to employment during an individual's first unemployment spell. Among men, only those in the lower part of the social skill distribution benefit from an increase in cognitive or social skills. Controlling for individuals' educational attainment leaves the qualitative results unchanged. Furthermore, the effects do not seem to be driven by observable differences in family background, parents' activities with the child or school characteristics. The findings of this study suggest that policy measures aiming at increasing early cognitive and social skills contribute also to reducing the risk of long unemployment episodes in adolescence and early adulthood. Moreover, in light of recent debates on achievements in international pupil tests that often focus on cognitive skills, this study provides additional evidence showing that one should not neglect investing in children's social skills since they are related to later outcomes in a similar way as cognitive skills.

Wondratschek, Verena (2010), The Importance of Cognitive and Social Skills for the Duration of Unemployment, ZEW Discussion Paper No. 10-104, Mannheim.