IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/24524.html
   My bibliography  Save this paper

The Production of Cognitive and Non-cognitive Human Capital in the Global Economy

Author

Listed:
  • Chong Xiang
  • Stephen Yeaple

Abstract

A country’s welfare depends on its ability to accumulate cognitive and non-cognitive human capital. In this paper, we model the productions of cognitive and non-cognitive human capital in general equilibrium. We use revealed comparative advantage to infer countries’ non-cognitive and cognitive productivities without a direct measure for the non-cognitive dimension. Our model also delivers analytical expressions for how non- cognitive and cognitive productivities can be aggregated into a single human-capital quality index, or HCQI, and how HCQI relates to output per worker. Our model allows us to obtain the values of non-cognitive and cognitive productivities and HCQI, using publically available data for a sample of mostly high-income countries. We find that: 1. many countries with low test scores have high non-cognitive productivities; 2. the hard-to-measure non-cognitive human capital is important for HCQI, and HCQI is important for output per worker; 3. the trade-o¤ between cognitive- and non-cognitive productivities can be visualized and analyzed using an iso-HCQI curve: e.g. uneven cognitive and non-cognitive productivities tend to lower HCQI; 4. this trade-o¤ can be quantified, and has policy implications: e.g. excessive attention to test scores may decrease aggregate output; 5. international trade matters, theoretically, for HCQI, because the gains from trade help to compensate a country for uneven productivity across human capital types: e.g. the iso-HCQI curve would have a very different shape under free trade.

Suggested Citation

  • Chong Xiang & Stephen Yeaple, 2018. "The Production of Cognitive and Non-cognitive Human Capital in the Global Economy," NBER Working Papers 24524, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:24524
    Note: ITI EFG DEV
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w24524.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Liu, Runjuan & Trefler, Daniel, 2019. "A sorted tale of globalization: White collar jobs and the rise of service offshoring," Journal of International Economics, Elsevier, vol. 118(C), pages 105-122.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hanson, Gordon & Liu, Chen, 2023. "Immigration and occupational comparative advantage," Journal of International Economics, Elsevier, vol. 145(C).
    2. Campbell, Susanna G. & Üngör, Murat, 2020. "Revisiting human capital and aggregate income differences," Economic Modelling, Elsevier, vol. 91(C), pages 43-64.
    3. Zhang, Yi & Kumar, Sanjay & Huang, Xianhai & Yuan, Yiming, 2023. "Human capital quality and the regional economic growth: Evidence from China," Journal of Asian Economics, Elsevier, vol. 86(C).
    4. Maksimova, Mariia, 2019. "The return to non-cognitive skills on the Russian labor market," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 53, pages 55-72.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mei, Maggie Qiuzhu & Wang, Le & Yan, Jie, 2023. "Maintaining product quality consistency when offshoring to emerging markets: The role of subsidiary control," Journal of International Management, Elsevier, vol. 29(1).
    2. Tiago Pereira, 2016. "The effect of developing countries' competition on regional labour markets in Portugal," GEE Papers 0058, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Mar 2016.
    3. Daniel CHIQUIAR & Martín TOBAL & Renato YSLAS, 2019. "Measuring and understanding trade in service tasks," International Labour Review, International Labour Organization, vol. 158(1), pages 169-190, March.
    4. Andrea Ariu & Katariina Nilsson Hakkala & J. Bradford Jensen & Saara Tamminen, 2019. "Service Imports, Workforce Composition, and Firm Performance: Evidence from Finnish Microdata," NBER Working Papers 26355, National Bureau of Economic Research, Inc.
    5. David Hummels & Jakob R. Munch & Chong Xiang, 2018. "Offshoring and Labor Markets," Journal of Economic Literature, American Economic Association, vol. 56(3), pages 981-1028, September.
    6. Ejaz Ghani & William R. Kerr & Christopher Stanton, 2014. "Diasporas and Outsourcing: Evidence from oDesk and India," Management Science, INFORMS, vol. 60(7), pages 1677-1697, July.
    7. Nicola Gagliardi & Benoît Mahy & François Rycx, 2020. "Trade, GVCs, and wage inequality: Theoretical and empirical insights," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(2), pages 115-134.
    8. Rui Costa & Swati Dhingra & Stephen Machin, 2022. "New dawn fades: Trade, labour and the Brexit exchange rate depreciation," CEP Discussion Papers dp1890, Centre for Economic Performance, LSE.
    9. José Daniel Pacas & Renae Rodgers, 2023. "Research Note on Linking CPS ASEC Files," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 42(3), pages 1-10, June.
    10. Davidson, Carl & Heyman, Fredrik & Matusz, Steven & Sjöholm, Fredrik & Zhu, Susan Chun, 2014. "Globalization and imperfect labor market sorting," Journal of International Economics, Elsevier, vol. 94(2), pages 177-194.
    11. Liu, Qing & Lu, Ruosi & Lu, Yi & Luong, Tuan Anh, 2021. "Import competition and firm innovation: Evidence from China," Journal of Development Economics, Elsevier, vol. 151(C).
    12. Omar Bamieh & Francesco Bripi & Matteo Fiorini, 2022. "Services trade and labor market outcomes: Evidence from Italian firms," Review of International Economics, Wiley Blackwell, vol. 30(3), pages 673-701, August.
    13. Jan Hogrefe & Jens Wrona, 2015. "Trade, tasks and training: The effect of offshoring on individual skill upgrading," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(4), pages 1537-1560, November.
    14. Jonathan Haskel & Robert Z. Lawrence & Edward E. Leamer & Matthew J. Slaughter, 2012. "Globalization and U.S. Wages: Modifying Classic Theory to Explain Recent Facts," Journal of Economic Perspectives, American Economic Association, vol. 26(2), pages 119-140, Spring.
    15. Artuç, Erhan & McLaren, John, 2015. "Trade policy and wage inequality: A structural analysis with occupational and sectoral mobility," Journal of International Economics, Elsevier, vol. 97(2), pages 278-294.
    16. Tempesti, Tommaso, 2015. "Fringe Benefits and Import Competition," MPRA Paper 69842, University Library of Munich, Germany.
    17. Haichao Fan & Cui Hu & Faqin Lin & Huanhuan Wang, 2022. "Trade liberalization and decentralization of state‐owned enterprises: Evidence from China," Economic Inquiry, Western Economic Association International, vol. 60(1), pages 224-246, January.
    18. Konstantin Koerner & Mathilde Le Moigne, 2023. "FDI and onshore task composition: evidence from German firms with affiliates in the Czech Republic," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 57(1), pages 1-42, December.
    19. Semih Akcomak & Henri de Groot & Stefan Groot, 2013. "The impact of trade, offshoring and multinationals on job loss and job finding," CPB Discussion Paper 252, CPB Netherlands Bureau for Economic Policy Analysis.
    20. Martin Tobal, 2019. "A model of wage and employment effects of service offshoring," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(1), pages 303-338, February.

    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:24524. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.