Research summary - How important are non-cognitive skills to earnings

Why this study

Evidence from several countries suggests that non-cognitive skills are important for wages and overall social outcomes. Yet, very few studies have looked at these relations for Canada, and there is none with recent data.

What we did

To help fill this gap, we assessed the influence of these skills on earnings for a sample of Canadian workers. We use data from the Longitudinal and International Study of Adults for 2012 and 2014 and the T1 Family File.

In our analysis, we used respondents' literacy and numeracy scores as a measure of their cognitive skills. We approximate their non-cognitive skills with measures of their key personality traits. We also take into account their personal and job characteristics.

What we found

Our findings suggest that non-cognitive skills matter in determining how much money people earn, but less so than cognitive skills. Among the non-cognitive skills we considered, being conscientious (that is diligent and thorough) contributes most to receiving higher wages, by about 7% on average. On the other hand, we find that higher cognitive skills can raise wages by almost 11% on average.

We also find that results differ by gender, with a higher return to being diligent and pleasant for women. All this suggests that non-cognitive skills are important for wages, but less so than cognitive skills.

What it means

The results support the idea that there are other determinants of wages and earnings besides education and work experience, especially cognitive and non-cognitive skills. Overall, cognitive skills appear to affect earnings more than non-cognitive skills. Still, the high returns of these skills, especially those valued in the workplace, make it important to monitor them when assessing workforce skills.

Contact us

Strategic and Service Policy Branch, Economic Policy, Labour Market and Skills Research

Email: ESDC.NC.SSPB.RESEARCH-RECHERCHE.DGPSS.CN.EDSC@hrsdc-rhdcc.gc.ca