Skills over the Life Cycle: Evidence from the United States and the Philippines

Abstract

The dynamic of skill formation is critical to understand fundamental labor market outcomes. Skills and occupational choices are profoundly related. A fundamental idea throughout this dissertation is that it possible to infer information about skills from occupational choices. Furthermore, such inferred information can be used to study the socio-economic causes and consequences of skill formation. Chapter 2 explores the skill content of occupational choices in the United States. The goal of the chapter is to measure the wage return to math and language skills, taking into account the self-selection process of occupational choice. Occupations must be treated as endogenous variables in any wage equation. I instrument the importance of math for a worker's occupation in her thirties and forties with the importance of math for the worker's preferred occupation back in her early twenties. A similar instrumental variable is proposed for language skills. This empirical strategy is possible after the combination of data from the National Longitudinal Study of Youth, 1979 Cohort (NLSY79) and the Occupational Information Network (O*Net). The Occupational Information Network reports key characteristics for more than 800 occupational categories, relevant for the United States, using more than 400 variables. In addition, O*Net data are publicly available, but there is no equivalent data source for developing countries. Chapter 3 proposes a cost-effective methodology to collect information on a limited subset of O*Net variables. I implemented the methodology in the Philippines by hiring the professional services of ten industrial psychologists. I combine these data with information from the Cebu Longitudinal Health and Nutrition Survey (CLHNS) to study gender differences in occupational aspirations, occupational choices and returns to skills. The last chapter explores the early stages of skills formation. It proposes an economic model to understand the effects of the Infant Health and Development Program (IHDP), an intervention done in the United States during the mid 80s which had the purpose of promoting the physical, social and mental development of premature infants. The chapter analyses the consequences of access to free and high-quality childcare services on time allocation and other inputs of the technology of early skill formation.