Risk, Norms, and Soft Skills: Non-Standard Drivers of Labor Market Outcomes

Abstract

How individuals decide whether and in what jobs to work, how firms decide whom tohire, and the aggregate wage and employment implications of these decisions are of central importance to labor economics and labor market policy. This dissertation explores the role of non-standard variables such as risk aversion, soft skills, and social norms in shaping these labor market outcomes. Chapter 2 examines job transition decisions and their wage growth implications over workers’ careers. Large transitions into higher-skill jobs can boost wage growth, but are rare. Whereas existing work largely focuses on the (mis)match between worker skills and job skill requirements to explain this pattern, this chapter presents evidence that, while skills matter, larger transitions are also riskier. Since workers are risk averse, this risk also contributes to their hesitance to make bigger career moves. These results carry important policy implications for the relative efficacy of skills-focused (e.g., training) compared to risk-focused (e.g., job search assistance) active labor market policies. Chapter 3 provides experimental evidence on how using information about job ap- plicants’ soft skills in firms’ hiring decisions affects both firm and workseeker outcomes. Partnering with the largest recruitment agency in South Africa, the experiment randomizes the criteria used to shortlist job applicants for job listings at partner firms. Results suggest that including measures of soft skills in candidate ranking leads to more efficient hiring and better firm-worker matches. Chapter 4 explores the relationship between social norms around work and labor mar- ket outcomes such as labor supply and wages. The analysis employs a novel measure of work norms in the U.S. over roughly the past decade, constructed using large-scale social media text data and machine learning methods. Results suggest that there is a meaningful relationship between social norms and labor supply, particularly for men.