Working Paper: NBER ID: w21473
Authors: David J. Deming
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.
Keywords: Social Skills; Labor Market; Wages; Cognitive Skills; Team Production
JEL Codes: J24; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| social skills (Z13) | real hourly wages (J31) |
| social skills + cognitive skills (Z13) | real hourly wages (J31) |
| social skills (Z13) | routine task intensity (J29) |
| social skills (Z13) | occupational sorting (J29) |
| routine task intensity (J29) | real hourly wages (J31) |
| occupational sorting (J29) | real hourly wages (J31) |
| social skills (Z13) | labor market success (J29) |