In the media: SSE Riga student paper examines how skills required in job adverts affect pay in Latvia’s labour market
National daily newspaper Diena has featured a story on the findings of a prizewinning research paper. Two recent SSE Riga graduates won the prize at the annual Bank of Latvia’s Student Scientific Research Paper Competition 2020.
In their Bachelor Thesis “Returns to skills in Latvia: What can we learn from job adverts?” Krišjānis Oskerko and Toms Henšelis researched the relationship between the level of education attained and remuneration. They examined returns on skills in the Latvian labour market using data obtained from actual online job adverts.
These students put a tremendous effort into creating a novel dataset, which they then analyzed in depth. The dataset consists of 1100 job adverts posted online from 2019 to January 2020 and covers 100 different occupations in Latvia. The study required patience plus a great deal of mechanical data collection work.
Analysis of the collected data confirmed the hypothesis: each individual skill mathematically gives an opportunity to achieve a higher salary. In their research, the students concluded that adverts with a higher number of required skills tend to offer higher pay.
"This can be concluded without econometric analysis, but then it is only an opinion, not a study," says Toms Henšelis. And as Krišjānis Oskerko emphasizes: "Now we can say - we have evidence!". The more skills you acquire, the higher the salary you will get - now this is scientifically researched, analyzed and confirmed.
The main findings of the study suggest that most of the skills that are reported in job adverts have a positive and statistically significant effect on pay. That is, job adverts requiring these skills (e.g. cognitive skills, project management) tend to offer higher pay than those that do not. These results are robust to inclusion of other wage determinants and different methodological choices. Furthermore, the findings suggest that most of the skills exhibit a positive effect on the salary offered by providing access to industries and occupations with relatively higher pay. However, certain skills ‒ namely software skills, customer service and project management skills ‒ are rewarded even within specific industry and occupation groups.
The authors of this research indicate that job adverts have not previously been used to investigate returns on skills in Eastern Europe and there are no studies that have assessed returns on skills in Latvia. Hence, the results could potentially elucidate a new set of wage determinants.