On Human Capital and Individual Capabilities

Abstract

Starting out from a simple conceptual framework running from initial individual abilities to skills produced in school to the utilization of these skills in the labor market, this paper surveys empirical studies in labor economics, economics of education and occupational psychology to assess the empirical strength of the links between these sets of variables. Cognitive and non‐cognitive abilities are relevant for economic success, but make a modest contribution. Occupational psychology is complementary to economics and supports the notion of interlocking heterogeneity of individuals and jobs.

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