The Growing Importance of Social Skills in the Labor Market

49 Pages Posted: 18 Aug 2015

See all articles by David James Deming

David James Deming

Harvard University - Harvard Kennedy School (HKS)

Date Written: August 2015

Abstract

The labor market increasingly rewards social skills. Between 1980 and 2012, jobs requiring high levels of social interaction grew by nearly 12 percentage points as a share of the U.S. labor force. Math-intensive but less social jobs - including many STEM occupations - shrank by 3.3 percentage points over the same period. Employment and wage growth was particularly strong for jobs requiring high levels of both math skill and social skill. To understand these patterns, I develop a model of team production where workers “trade tasks” to exploit their comparative advantage. In the model, social skills reduce coordination costs, allowing workers to specialize and work together more efficiently. The model generates predictions about sorting and the relative returns to skill across occupations, which I investigate using data from the NLSY79 and the NLSY97. Using a comparable set of skill measures and covariates across survey waves, I find that the labor market return to social skills was much greater in the 2000s than in the mid 1980s and 1990s.

Suggested Citation

Deming, David James, The Growing Importance of Social Skills in the Labor Market (August 2015). NBER Working Paper No. w21473. Available at SSRN: https://ssrn.com/abstract=2645569

David James Deming (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

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