The impact of cognitive and non-cognitive skills on occupational outcomes: Evidence from Indonesia

This study examines the educational and labor market outcomes of Indonesia's vocational education system, analyzing how different educational pathways and personality traits influence employment prospects. Using data from the Indonesian Family Life Survey, we investigate the returns to various educational levels, particularly comparing vocational and general education, while considering the role of non-cognitive skills measured through the Big Five personality traits. The findings indicate that vocational education significantly enhances employment prospects and wages in urban areas, highlighting the importance of technical and practical skills development. Among non-cognitive skills, conscientiousness emerges as the most crucial factor for both employment and wages, while emotional stability positively affects wage levels. We further find that neglecting these non-cognitive skills can overstate the significance of education in determining labor market outcomes. The study reveals important implications for educational policy, particularly in curriculum design, teaching methodologies, and the alignment of vocational education with labor market needs. The results suggest that strengthening the integration of technical skills training with personality development in educational programs could enhance employment outcomes in developing economies.