Competencies, occupational status, and earnings among European university graduates

Abstract

While the effect of education and experience on labour market outcomes has been widely studied, the literature that analyses the influence of human capital competencies (talents, skills, and capabilities) is still relatively scarce. Using cross‐sectional data from the REFLEX Project, we investigate the effect of personal competencies (both cognitive and non‐cognitive) on two labour market outcomes among European university graduates: occupational status and earnings. Our estimates suggest that individuals endowed with a higher level of competencies are more likely to occupy managerial and professional positions and, to a lesser extent, technician jobs. Additionally, they also receive higher wages, but the relation is only significant for men. When we distinguish competencies according to their cognitive or non‐cognitive nature, we find that only the latter are significant in explaining occupational status. In contrast, cognitive competencies are more related with wages. As regards the role of specific competencies, our findings suggest that leadership is the most relevant competence for the occupational status of males, especially in managerial positions. In contrast, initiative and enterprise abilities seem to be the most relevant skills for women in such positions. Intelligence produces the highest rewards in terms of earnings among the male subsample, while none of the competencies exerts a significant impact on females’ wages