It's Not Me, It's You: Social Skills and Human Capital in the Labor and Marriage Markets

This paper examines the role of social skills, as distinct from standard wage-determining human capital, in determining economic outcomes in labor and marriage markets. Social skill, or social capacity, is understood in our framework as the ability to maintain long-term relationships, whether professional or personal. Using a Mincer-Jovanovic (1981) framework and evidence on job and marital separations from the PSID, we argue that social capacity can be understood as an individual fixed factor affecting the durability of relationships both in the formal work and informal household sectors. We then use merged PSID and O*NET data to develop and estimate a life cycle model of schooling, job search and marriage. The model allows us to examine quantitatively how social capacity affects optimal schooling and occupational decisions, as well as to estimate the joint distribution of social capacity and human capital in the population. Preliminary evidence suggests that social capacity strongly increases the return to education, conditional on an individual's human capital, since it lowers the probability of being fired from "good" jobs that require substantial human interaction, which in turn makes it easier for an individual to climb the career ladder.