Cultural Values and Productivity

This recent paper in the Journal of Political Economy investigates the influence of culture on human capital – experience and skills of an individual that determine how productive they are in creating economic value. The paper finds that cultural values is the best predictor of estimates of human capital. This suggests that years of schooling and experience do not explain differences in human capital and productivity. Differences are also not explained by discrimination or parental characteristics. The paper finds that those from cultures that place a high value on autonomy (i.e. secular-rational as opposed to traditional values) have comparative advantage in industries and occupations with lower levels of routinization. That is to say, coming from a culture where autonomy is valued boosts productivity in types of work where innovation and creativity are particularly important. The paper raises a lot of questions around how one should think about human capital, the contributions that people with different cultural background might make in different work contexts, and how to evaluate the economic benefits of migration.

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