Abstract: While social skills seem to gain importance in the workplace, other skills may become less relevant. The evolution in skill demand and supply directly affects wage returns to skills over time. However, estimating returns to skills is challenging: a potential bias comes from unmeasured ability differences, and there is an indirect return through college. This paper estimates direct and indirect returns to skills, controlling for unmeasured ability differences, using a novel dynamic model with endogenous cognitive, social, and diligence skills. In Germany, across recent cohorts, returns to social skills grew by 6 percentage points across cohorts. Due to routine task displacement and sorting into routine-intensive occupations, returns to diligence skills for low-cognitive individuals dropped by 10 percentage points. 

Abstract: We estimate a Dynamic Discrete Choice Model to investigate the causal relationship between educational attainment, overeducation in the first job after graduation and subsequent wages. Moreover, we introduce a novel decomposition approach to analyze how overeducation risk affects the expected (unconditional) wage returns to educational attainment and their distribution. To this end, we rely on longitudinal Belgian data. We find initial overeducation to generate a wage penalty that persists at least up until age 29. Even so, the effect of overeducation risk on the expected return to college is found to be moderate at best and, in some cases, even positive. This is partly due to a reduced overeducation risk that results from obtaining a bachelor’s degree, most likely as a consequence of job polarization. We also find overeducation to generate substantial heterogeneity in realized (ex-post) returns to education. Overall, these results suggest overeducation to be much more indicative of search and matching frictions on the labour market rather than of considerable overinvestments in higher education.

Abstract:  On average, returns to college are positive and substantial, but they hide substantial heterogeneity across individuals and college majors. This paper estimates the heterogeneous returns to college majors and the impact of skill mismatch using a dynamic model of educational and labor market choices, controlling for unobserved heterogeneity. Identification leverages exclusion restrictions, including local labor market conditions, distance to college, and graduation timing. While most majors yield positive average returns, a sizable share of individuals face low or negative returns, largely due to college major choices and substantial penalties from skill mismatch.

Abstract:  This paper investigates the impact of temporary employment on work-related injuries. We leverage a 2018 Italian labor market reform that restricted temporary employment and adopt a Difference-in-Differences approach combined with a synthetic control method to address endogeneity concerns. Using granular administrative data on injuries and employment contracts, our results show no significant overall effect of the reform on injuries but reveal reductions in mild injuries, among high-risk individuals, such as men and foreign workers, and in highly concentrated local labor markets. The investigation of the potential mechanisms indicates that improved working conditions, not reporting biases, drive the reductions. Overall, our findings suggest that policymakers should prioritize enhancing working conditions over focusing solely on contract types to effectively reduce workplace accidents.