Soft skills and immigrants’ economic outcomes in Europe: evidence from PIAAC data

This study examines the importance of soft skills for explaining immigrant-native inequalities in the labor market in Europe. Soft skills are necessary to take advantage of new technologies and adapt to changing work environments. However, we know little about their influence on immigrant-native inequalities in the labor market. This study extends and contributes to previous research by examining whether and to what extent soft skills, net of educational credentials, and cognitive skills, can explain immigrant-native inequalities in job access and quality employment (i.e., wages and occupational status). We also study whether the economic returns to soft skills vary across immigrants and natives. Given the disadvantaged position of immigrants in the labor market, with immigrants coming from nonwestern countries being most disadvantaged, an important question is whether and to what extent soft skills can enhance or alleviate this disadvantage. The analyses are based on a large scale, comparative survey data from the Programme for the International Assessment of Adult Competencies (PIAAC 2012). The data provide detailed information about educational degrees, measures of cognitive and noncognitive skills, and immigrants’ labor market outcomes. We apply regression analyses with country-fixed effects and robust standard errors to adjust for clustering at the country level. We find a positive relationship between soft skills and immigrants’ economic outcomes, net of educational credentials, and cognitive skills. While the economic benefits from soft skills do not differ significantly among natives and immigrants originating from western countries, they are significantly lower for nonwestern immigrants.