On SAGE Insight: Is it better to invest in hard or soft skills?

From The Economic and Labour Relations Review

In the labour market there are hard skills (embodied in acquired qualifications) and so-called soft skills (e.g. overcoming barriers in communications, building relationships with customers, work planning, cooperation with others, etc.). There are no doubts that hard skills embodied in acquired qualifications are necessary for labour market success . It is very difficult to measure soft skills as there is no test, according to author’s knowledge, which objectively assesses the individual’s workplace behaviour as it is an interactive process depending on context. Both types of skill significantly increase an individual’s productivity. Increasing awareness of the productive potential of soft skills has sparked a discussion of their systematic and purposeful development.

This article provides new evidence on different aspects of the wage returns to soft skills (as an approximation of their productivity), and thereby contributes significantly to the discussion of the role of educational institutions in their development. With changes in distribution of these skills between genders, this led to a significant reduction of the gender wage gap.

Abstract

Increasing awareness of the productive potential of soft skills has sparked a discussion of their systematic and purposeful development. However, education systems pay only limited attention to this topic in most countries and remain focused on the development of hard skills. Is this approach rational or inadequate? This article provides new evidence on different aspects of the wage returns to soft skills (as an approximation of their productivity), and thereby contributes significantly to the discussions of the role of educational institutions in their development. It provides evidence that soft skills are as productive as hard skills. Moreover, it suggests that the productivity of hard skills stems from their combination with soft skills. These conclusions do not correspond to the fact that the value of education is intermediated mainly by hard skills, resulting in unequal development of soft and hard skills in schools. While concluding that education systems should pay more attention to soft skills development, the analysis recognises that this attention should be differentiated according to employers’ needs, owing to substantial differences in the value of soft skills across economic sectors. It is also noteworthy that while significant gender differences in returns to hard skills were identified, wage returns to soft skills appear gender neutral. JEL Codes: J24, J31, J71

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Article details
Jiří Balcar
Is it better to invest in hard or soft skills?
The Economic and Labour Relations Review 1035304616674613, first published on October 28, 2016 doi:10.1177/1035304616674613

 

 

 

     
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