Skills and Earnings: A Multidimensional Perspective on Human Capital

Ludger Woessmann ()
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Ludger Woessmann: ifo Institute and CESifo, University of Munich, Munich, Germany

Annual Review of Economics, 2025, vol. 17, issue 1, 397-425

Abstract: The multitude of tasks performed in the labor market requires skills in many dimensions. Traditionally, human capital has been proxied primarily by educational attainment. However, an expanding body of literature highlights the importance of various skill dimensions for success in the labor market. This article examines the returns to cognitive, personality, and social skills, which are three important dimensions of basic skills. Recent advances in text analysis of online job postings and professional networking platforms offer novel methods for assessing a wider range of applied skill dimensions and their labor market relevance. Synthesis and integration of the evidence of the relationship between multidimensional skills and earnings, including the matching of skill supply and demand, will enhance our understanding of the role of human capital in the labor market.

Keywords: cognitive skills; earnings; personality; labor market; education; tasks; social skills; human capital; skills; multidimensional skills (search for similar items in EconPapers)
JEL-codes: I26 J24 (search for similar items in EconPapers)
Date: 2025
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Citations: View citations in EconPapers (1)

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DOI: 10.1146/annurev-economics-081324-081733

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