From Learning to Knowing: A Psychological–Neurological Approach to Explain the Human Capital Formation Process

Abstract

By drawing on neurological and psychological theories of learning, our study introduces a new conceptual framework to analyse the role learning plays in knowledge and skill acquisition. Learning is modelled through four mechanisms defined as individuals' participation in formal, non-formal, and informal learning, as well as learning-by-doing. Our analysis suggests heterogeneity in how various learning mechanisms affect individuals' overall stock of knowledge and skills. Additionally, the proposed analytical framework points to the existence of an optimal sequence in which different learning forms should be pursued in order to maximise overall stocks of human capital. These propositions are tested with the Adult Literacy and Life Skills Survey data (2003) Learning is incorporated into most public policies ranging from poverty alleviation to combating unemployment. Its impact remains questionable, however, with many arguing that education or training can only slightly change one's occupation-specific knowledge and skills and hence an individual's opportunities in the labour market. Despite strong evidence of a positive return to education, formal learning has often failed to explain the majority of crossindividual differences in wages, even within one country (Hanuschek & Woessmann, 2011).Similarly, training or non-formal learning often proves ineffective in increasing one's earnings or odds of employment (Fay, 1996; Heckman, LaLonde, & Smith, 1999;Sousounis, 2012). Consequently, governmental policies concerning equal access to education are being deprioritised, while a gradual expansion of private educational institutions can be observed in many developed and developing countries. This study's main objective is to present a new comprehensive analytical framework explaining the relationship between participating in various learning activities and an individual's overall stock of knowledge and skills. The main idea we introduce is that learning has a continuous nature and effects thereof can only be maximised if various learning forms are combined throughout an individual's life. We explain this argument by supplementing economics with psychological and neurological approaches to modelling the initial formation and subsequent change of brain architecture within which the accumulation of knowledge and skills is embedded. The main rationale behind our idea is that synaptic connections storing knowledge need to: (1) be developed and (2) sustained throughout an individual's life in order to function effectively. Both stages are perceived as important. Initial learning helps to create the framework necessary for storing information. Later learning FROM LEARNING TO KNOWING 4 undertaken after formal education contributes to sustaining and further expanding this framework. Our argument promotes the idea that formal education should be combined with non-formal and informal learning as well as with learning at the workplace, as one can only observe strong educational effects on an individual's stock of human capital...