Four Facts about Human Capital
AbstractThis paper synthesizes what economists have learned about human capital since Becker (1962) into four stylized facts. First, human capital explains at least one-third of the variation in labor earnings within countries and at least half of the variation across countries. Second, human capital investments have high economic returns throughout childhood and young adulthood. Third, we know how to build foundational skills such as literacy and numeracy, and resources are often the main constraint. Fourth, higher-order skills such as problem-solving and teamwork are increasingly valuable, and the technology for producing these skills is not well understood. We know that investment in education works and that skills matter for earnings, but we do not always know why.
CitationDeming, David J. 2022. "Four Facts about Human Capital." Journal of Economic Perspectives, 36 (3): 75-102. DOI: 10.1257/jep.36.3.75
- I26 Returns to Education
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- M53 Personnel Economics: Training
- M54 Personnel Economics: Labor Management