Is it better to invest in hard or soft skills?

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 discussion 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

Training, human capital, and gender gaps in entrepreneurial performance

“…These findings are consistent with Fairlie and Holleran (2012), who found that individuals with specific personality traits seem to benefit more from entrepreneurial training programs than people without such characteristics. Our results are also linked with research on the productive potential of soft skills and with the recommendations for balanced development of hard and soft skills (Ruback, 2015;Balcar, 2016).…”

Influence of female managers on gender wage gap and returns to cognitive and non‐cognitive skills

“…It may be explained by their productivity and transferability across employers who compete for workers with these personal traits. Moreover, gender neutrality of wage returns to non‐cognitive skills corresponds to conclusions by Balcar (), who approximated them by job requirements for 15 soft skills (e.g., communication, cooperation, problem‐solving, leadership, etc. ).…”

“…The remuneration of non‐cognitive skills deserves special attention as they are, together with education, the most important wage determinant in the Czech Republic (see Balcar, for empirical evidence). Therefore, it was not surprising that the association with a role of the breadwinner and the performance‐oriented behaviour, such as the need to excel, persistence, diligence (approximated by a difference between the number of hours truly devoted to work and the official workload) and low absence from work were found highly statistically significant (Model 5 in Table ).…”

Interaction of Employers and Universities in Training and Employment of Young Professionals

“…E.g. issues of interest are mentoring in the workplace as a part of passing various practices in an employers' organization [6], the efficiency of gaining the entrepreneurial skills the graduates will need to work successfully after the university [7], advantages and disadvantages in the forming of narrow and wide specialized skills of future university graduates and the need for employers to participate in this process [8]. It is noted that training in the workplace arranged by the employer plays a special role in the preparation of graduates.…”