IZA DP No. 15177: Measurements of Skill and Skill-Use Using PIAAC
We develop new indices of skill and skill use, drawing on the alley of skill and skill-use questions in the Programme for the International Assessment of Adult Competencies (PIAAC). We demonstrate that the proposed skill and skill use indices explain the wage gap between males and females, as well as the gap between immigrants and natives. We also show that the skill use index captures the side effect of parental- leave policies on females that conventional labor-market outcomes fail to capture. We discuss how the newly developed indices can be merged to conventional survey data.