Four Facts about Human Capital
This 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.
I thank Kelsey Heroux for excellent research assistance. I have no financial conflicts to disclose. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
David J. Deming, 2022. "Four Facts about Human Capital," Journal of Economic Perspectives, vol 36(3), pages 75-102.