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Is it better to invest in hard or soft skills?

Published online by Cambridge University Press:  01 January 2023

Jiří Balcar
Jiří Balcar*
Affiliation:
VSB – Technical University of Ostrava, Czech Republic
*
Jiří Balcar, Faculty of Economics, VSB – Technical University of Ostrava, Sokolská třída 33, 702 00 Ostrava, Czech Republic. Email: jiri.balcar@vsb.cz
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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.

Keywords

Educationgender differenceshard skillsinteractionsoft skillswage returnsJ24J31J31

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Type
Articles
Information
The Economic and Labour Relations Review , Volume 27 , Issue 4 , December 2016 , pp. 453 - 470
Copyright
© The Author(s) 2016

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