We Must Identify Key Skills in the Era of AI

TSURU Kotaro
Program Director and Faculty Fellow, RIETI

This is said to be the era of the 100-year-lifespan and also the era of AI (artificial intelligence). In order to adapt to rapid social changes with an eye on continuing to work when we are in our 70s and 80s, we must make continuous efforts to develop the skills required in this era while undertaking appropriate re-learning.

Meanwhile, the ongoing COVID-19 pandemic, which is a crisis of an unprecedented nature, has revealed that Japan is lagging in promoting digitization and making maximum use of ICT (information and communications technology), big data, and AI. It has become clear that the advantage that Japan has in terms of "human skills" regarding communication and sharing of information has become a significant impediment to active acceptance of new technologies.

This is an example of an "innovation dilemma." If Japan is to leap to a new stage in a post COVID-19 world, the major challenge will be enabling the Japanese people to acquire the skills necessary to make full use of new technologies and developing education to that end.

To aid us in thinking about those challenges, this article will introduce research work that the author conducted jointly with Mr. Koichi Kume (Toyo University), Mr. Shinpei Sano (Kobe University), and Mr. Kengo Yasui (Aoyama Gakuin University). Our research is based on an online questionnaire survey called "Internet Survey on Intergenerational Education and Training, and Cognitive and Non-cognitive Abilities," which was conducted in 2019 by the Research Institute of Economy, Trade and Industry.

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The survey is unique in two ways. First, it comprehensively covers a very broad range of areas, including various activities and experiences of the respondents at school, at home, and in the workplace from pre-school until the present, and the development and use of skills and capabilities, including cognitive abilities (abilities that can be evaluated by academic achievement tests) and non-cognitive abilities (aspects of one's personality).

The activities and experiences surveyed (hereinafter referred to collectively as the "experiences") are not limited to ones that occurred in the classroom or workplace but also include pre-school education, afterschool activities, preparation for the junior high-school entrance exam, extracurricular school activities, studying abroad, and personal development efforts. The skills and capabilities surveyed (hereinafter referred to collectively as the "skills") include, in addition to the abovementioned cognitive and non-cognitive abilities, job proficiency, basic social and life skills, English language skills, and IT (information technology) skills.

Second, we have improved the validity of the survey results by taking the additional step of asking some respondents to take the Education and Skills Online Assessment, which is a paid, internet-based test offered by the Organization for Economic Cooperation and Development (OECD), which relates to cognitive abilities that are hard to assess through the questionnaire survey. Test-takers answer a total of 102 questions and are assessed on a five-grade scale in terms of reading and mathematical thinking skills.

In our research, we focused on wages (hourly wages) as a typical indicator of the outcome of working careers. We found that in many areas, the wage level is correlated to the presence or absence of, or differences in, the experiences and skills surveyed.

Accumulating a large variety of experiences and developing skills leads to successful outcomes in working careers. Although this may seem like simple common sense, it is important that the assumption has been validated by survey-based evidence. The survey also makes it possible to identify what kinds of experiences and skills are more required than others. Below, I will provide you with a closer look at the survey results and cite some of our research findings.

First, regarding the correlation between pre-work career experiences and the wage level, there was a clear difference between men and women. In the case of men, the wage level was significantly higher for the following three groups than for others: (1) those who attended Japanese kindergarten, rather than Japanese nursery school , in the pre-school period, (2) those who gained leadership experience in extracurricular activities in junior and senior high school, and (3) those who attended a university for which the entrance threshold is relatively high (subjective assessment based on the deviation value). In the case of women, we did not observe statistically significant differences in the wage level between those groups and others, which means that the correlation is weak (See Figure 1).

Figure: 1.Average Hourly Wage by University Entrance Threshold level/2.Average Hourly Wage by Score Level on the Reading and Mathematical Thinking Test (OECD)
Source: "Study on the actual status of education, training and skills in schools and workplaces in Japan—evidence from a comprehensive survey by RIETI, 'Internet Survey on Intergenerational Education and Training, and Cognitive and Non-cognitive Abilities,'" co-authored by Tsuru, Kume, Sano, and Yasui (2019, RIETI PDP 19-P-035). As for the additional analysis, see RIETI DP 20-J-024.

In the case of men, there was also a significant difference in the wage level depending on the major subject of study at university, but in the case of women, there was no such difference. If those results point to the possibility that women's pre-work career experiences are not likely to be reflected in the outcomes of their working careers, it is necessary to increase job opportunities for women and to ensure that their experiences are appropriately assessed in the labor market.

Second, regarding the results of the OECD's abovementioned cognitive abilities test, mathematical thinking skills have a stronger correlation with the wage level than reading skills (See Figure 2). This appears to be consistent with findings of the survey, such as the relatively high wage level for those who excelled in the sciences in senior high school compared with those who excelled at Japanese language and other non-science subjects, and the presence of a positive correlation between the level of IT skills and the wage level among both men and women. Given that the current era requires the ability to make full use of AI and big data, the need for science- and IT-related skills will continue to grow.

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The third finding concerns non-cognitive abilities, which are aspects of your personality. Non-cognitive abilities are measured using the "big five" personality traits. Of the "big five" —"agreeableness," "extraversion," "conscientiousness," "emotional stability," and "openness to experience"— all except for "agreeableness" were found to have a positive correlation with wage level. However, as a result of an additional analysis conducted mainly by Mr. Yasui which also takes into consideration the effects of other non-cognitive abilities, it was found that "extraversion (sociability and assertiveness)" and "self-esteem" were the only factors that had a generally positive correlation with the wage level in various cases.

"Self-esteem," which is regarded as an aspect of "emotional stability," one of the big five personality traits, has been confirmed by foreign studies to have a positive correlation with the wage level. "Self-esteem" also has a very significant correlation with "conscientiousness," which, according to our previous studies, has a strong correlation with the outcome of working careers. Therefore, we may say that our findings are appropriate.

On the other hand, foreign studies have concluded that "extraversion" does not have significant effects on the wage level. Therefore, the correlation that we found between "extraversion" and the wage level may be a unique feature of the working environment in Japan. There is a possibility that extraversion is considered to be an important personality type under Japan's membership-based employment system (which features personality-based job assignment), which requires close coordination between employees.

With respect to non-cognitive abilities, it was previously pointed out that non-cognitive abilities are correlated with cognitive abilities. However, we found little correlation between the various cognitive and non-cognitive abilities that were analyzed in our research. As far as the wage level being an indicator of the outcome of working careers is concerned, it has become clear that it is important to develop cognitive and non-cognitive abilities separately.

However, of the non-cognitive abilities, "agreeableness," which includes empathy, was confirmed to have a negative correlation with wage level among women (particularly in terms of limiting the number of high-income earners), according to the additional analysis. This is consistent with the findings of foreign studies. Presumed reasons for the presence of this negative correlation include that people who have a high level of agreeableness may sacrifice certain aspects of their success to please others in some cases and that such people are not effective when negotiating for themselves.

On the other hand, there is an argument that in the era of AI, social skills that enable us to understand the feelings of individual members of our social and professional groups will become important. In the future, non-cognitive abilities that are valued by the labor market may also change. I hope that future analyses will deepen understanding on the relationship between individuals' personal experiences and skills and the outcome of their working careers.

>> Original text in Japanese

* Translated by RIETI.

May 11, 2020 Nihon Keizai Shimbun

October 21, 2020