Wanted: Soft Skills

By Yuri Soares and Maria Elena Nawar

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Yuri Soares is chief of development effectiveness at the Multilateral Investment Fund. He holds a PhD in economics from Michigan State University and a master's degree in agricultural economics from the University of Florida. He has worked in the United States and Brazil.

When Diogo Barbosa was hired to work at a construction site for the subway in Rio de Janeiro, he did not give much thought to the path that took him from the streets of a Rio slum, to the work site of a well-paying formal job. Nor was he thinking of the skills he had acquired throughout his lifetime, and how they would be key to his success. Rather, he was intent on making the best of the opportunity at hand. Diogo is one of those employees that bosses really like. He is always on time at the job site, and will often stay later if needed. According to the job site supervisor he never passes up an opportunity to learn a new skill. He takes the initiative to help others get the job done. He is also known to solve complicated problems, and his peers often turn to him for help.

Diogo possesses a series of skills--known as socio-emotional skills, non-cognitive skills or "soft" skills--that employers typically single out as fundamental for success in the workplace. Discipline, initiative, problem-solving, confidence: these are some of the attributes that Diogo's site supervisor values in his employees. But how and when are these skills acquired? Can programs and policies help in the formation of these skills, and if so, how?

Diogo was one of the graduates of Galpão Aplauso, a Rio youth training program run by a nongovernmental organization and financed by the Multilateral Investment Fund of the Inter-American Development Bank (IDB) Group. Galpão uses performing arts to develop vocational, academic, and socio-emotional skills for youth ages 15 to 29. It significantly improved the employability of participants such as Diogo. The skills they learned and the networks they built during the 6-month program eventually translated to higher employment rates and better-paying jobs, according to a randomized controlled trial (RCT) conducted by the IDB and the Instituto de Pesquisa Econômica Aplicada (IPEA), a top research institute in Brazil.

But were these impacts driven by the vocational or academic training, or by the socio-emotional development? The results of the RCT provide precise estimates of the program's overall impact, but do not trace the impacts back to their respective causes. The specialized literature is only now beginning to disentangle the impact of technical, academic, and socio-emotional skills on job success.

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Multilateral Investment Fund

Socio-emotional skills are generally defined as the skills that allow us to be successful managing social and interpersonal situations and events. They are related to psychological traits, but unlike traits, they are malleable, and can be shaped by our experiences, particularly early in life. The development of the brain conditions how and when these skills are learned. Some can only be learned early in life, and are pretty well wired by adolescence. Others develop later in life. Many of the socio-emotional skills important for labor market success continue to develop throughout adolescence and even early adulthood, as is pointed out in a recent paper by Nancy Guerra, Kathryn Modecki, and Wendy Cunningham. Skills related to confidence, initiative, discipline and control, and problem solving can be molded until the mid to late 20s.

There is now a consensus in the economics and psychology literature that socio-emotional skills are strong determinants of youth outcomes, including labor outcomes. In fact, a growing evidence base shows that these skills rival academic or technical skills in their ability to predict employment and earnings, among other outcomes, as shown in a recent review of the literature by Tim Kautz and others. As workplaces have become increasingly complex around the world, the demand for such skills has grown in the past 20 years. Employers increasingly value these soft skills, which they typically find in short supply, and are ill equipped to provide themselves. A recent review of skills valued by employers identified no fewer than 140 different sub-types of socio-emotional skills.

What does all of this mean for policies to help youth succeed?

There is lots of good news. The consensus that socio-emotional skills are fundamental for success in life and in the workplace has, for the most part, reached policymakers. Most youth programs designed today incorporate a focus on the development of soft skills. Also, the economics underlying socio-emotional skills, their relationship to the science of neurobiological development, as well as tools for us to measure these skills, are advancing fast. That too is good news, as this fast-moving research can be used to improve program design and implementation. And there are many forums available where academics and practitioners can exchange information.

Of course, many challenges remain. We don't know how to properly measure socio-emotional skills. We do not have a clear understanding of what program structures work best to develop each of these skills. And we have very little granular data on the importance of different skills for labor market outcomes. These obstacles will have to be overcome if we are to design better programs, to provide youth such as Diogo with the best shot at success.

Maria Elena Nawar
Maria Elena Nawar, a lead specialist at the Multilateral Investment Fund (MIF), is designing a more rigorous monitoring and evaluation framework for MIF projects and products and working on changes to enhance results and risk management and streamline fiduciary procedures.

From the Multilateral Investment Fund Trends blog