The Growing Importance of Social Skills in the Labor Market

David Deming

No 21473, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The labor market increasingly rewards social skills. Between 1980 and 2012, jobs requiring high levels of social interaction grew by nearly 12 percentage points as a share of the U.S. labor force. Math-intensive but less social jobs - including many STEM occupations - shrank by 3.3 percentage points over the same period. Employment and wage growth was particularly strong for jobs requiring high levels of both math skill and social skill. To understand these patterns, I develop a model of team production where workers “trade tasks” to exploit their comparative advantage. In the model, social skills reduce coordination costs, allowing workers to specialize and work together more efficiently. The model generates predictions about sorting and the relative returns to skill across occupations, which I investigate using data from the NLSY79 and the NLSY97. Using a comparable set of skill measures and covariates across survey waves, I find that the labor market return to social skills was much greater in the 2000s than in the mid 1980s and 1990s.

JEL-codes: J24 J31 (search for similar items in EconPapers)
Date: 2015-08
New Economics Papers: this item is included in nep-ger, nep-hrm and nep-lma
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Citations: View citations in EconPapers (64)

Published as David J. Deming, 2017. "The Growing Importance of Social Skills in the Labor Market*," The Quarterly Journal of Economics, vol 132(4), pages 1593-1640.

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