The increase in foreign participation has therefore not been associated with a growing number of banks. Journal of Financial Stability 19 (2015) 70–82įoreign participation in Indonesian banking has expanded from the establishment of foreign de novo banks into the acquisition of existing local banks. Tri Mulyaningsih,∗, Anne Daly, Riyana Miranti Keywords ─ earnings, cognitive & non-cognitive skills, big five personality traits, Mincer equationįoreign participation and banking competition: Evidence from the Indonesian banking industry This study also utilizes the instrumental variable approach of 2-Stage Least Squares to deal with omitted variable bias and the endogeneity problem in the basic Mincer model. Originality ─ This study contributes to the literature by measuring the effects of unobservable cognitive skills and non-cognitive skills on earnings in developing countries absent in the previous studies. Implication ─ The policy should aim to enhance human capital by improving knowledge, cognitive and non-cognitive capacities to assist students in achieving their full potentials. In addition, the relationship between education and earning is nonlinear, suggesting that the returns on education varied across education levels. Using the Indonesian labour data from the 5th wave of Indonesian Family Life Survey (IFLS), the 2-Stage Least Squares is employed to measure the effects of schooling, cognitive and non-cognitive skills on earnings.įindings ─ The results show that schooling and skills, both cognitive and personality traits determine the labour market outcomes. Methods ─ A revised Mincer Model serves as a theoretical framework to explain the contribution of schooling and skills to earnings. Importantly, this study captures the importance of observing cognitive skills and non-cognitive skills associated with personality traits in determining earnings.

Purpose ─ This study examines the contribution of schooling and skills to earnings. Tri Mulyaningsih1*, Dhian Adhitya2, Amelia Choya Tia Rosalia3Įconomic Journal of Emerging Markets, 13(2) 2021, 168-177 Using paper titled: 'Education, skills, and labour market outcome in Indonesia: An instrumental variable approach'

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