Misallocation of workers and their human capital across sectors has negative implications for productivity. The literature examining this type of labor misallocation has mostly assumed a Cobb–Douglas production function, which is at odds with important macroeconomic frameworks and empirical evidence. Our paper hence suggests a new twist to revisit the question: to what extent does human capital misallocation across sectors explain why some countries are so much richer than others? Our innovation consists of incorporating a more flexible and empirically plausible CES production structure with different labor skill types into the misallocation literature. The results from this analysis indicate that human capital misallocation can explain approximately 15% of output per worker variation across countries, which is about one fourth less than under the conventional Cobb–Douglas specification (21%). This suggests that labor market efficiency may be less of a problem for aggregate productivity differences than previously thought.

The paper examines the macroeconomic and welfare implications of varying tax rates and degrees of progressivity in consumption taxation. We analyze tax reforms within two comparable overlapping-generations models that feature heterogeneous agents and uninsurable productivity risk, differing only in their treatment of human capital. Both models are calibrated to replicate salient features of the U.S. economy, notably observed patterns of income and wealth inequality. Our quantitative analysis demonstrates that moderate increases in flat consumption tax rates can enhance welfare through capital deepening, higher labor supply, and increased output, while also mitigating wealth inequality. However, excessively high flat consumption taxes deteriorate social welfare. Transitioning to a progressive consumption tax regime, where marginal tax rates increase with household expenditure, yields additional welfare gains. Progressive consumption taxation reduces wealth inequality and improves aggregate welfare by aligning tax liabilities with consumption capacity while preserving efficiency. Therefore, an optimally calibrated progressive consumption tax can dominate flat-rate alternatives in welfare terms, particularly in economies with pronounced wealth inequality.

The child quantity–quality (QQ) tradeoff is central to both household decision-making and long-run theories of economic development. Despite extensive research, there is little consensus regarding the sign of the effects of additional siblings on child outcomes. Most previous studies examine the relationship between family size and child quality indirectly through the consequences of the allocation of parental resources, such as educational and labor market achievements. Using Indian data, I present evidence of a quantity–quality tradeoff in direct parental monetary expenditures in shadow education (or private tuition). Exploiting the elder son preference typically observed in the study context, I instrument fertility with gender of the first child, two girls, and same-sex birth. IV estimates show a parity-specific quantity–quality tradeoff. The effects are heterogeneous. In wealthier families or those in urban areas, the trade-off is more pronounced.

Since Gary Becker received the Noble Prize in 1992, the theory of human capital has become deeply entrenched in mainstream economics. Building on the work of John Locke and David Hume, Adam Smith portrayed the investment in education as a critical factor for economic growth. He argued that the acquisition of knowledge and skills is a type of capital, much like a machine, and thus articulated the concept of human capital in all but in name. While the correlation between schooling and future earnings has been firmly established by empirical studies, the specific causes at work are still under debate. It is not yet established whether it is the quantity or quality of the education, or the preschool, primary, secondary, or tertiary stages, that matters the most, or even at all. Some scholars discredit schooling as either a type of signaling or behavioral modification that has little in common with job training. This essay will canvas some of the early modern literature on human capital theory and then critique contemporary efforts to locate the causal nexus between investments in education as the primary form of human capital and economic output. The theory of human capital, it is argued, is beset with ambiguities and vague appeals at the causal level.

This essay argues that young people must practice freedom, responsibility, and democratic self-government in order to be fit for freedom, responsibility, and democratic self-government. The essay first examines the nature, origins, and consequences of the dominant factory model of schooling in light of the constructivist view of learning. It then discusses Peter Gray’s, Maria Montessori’s, and Alexis de Tocqueville’s views on how the practice of freedom in a self-governing community generates intellectual and moral virtues. Finally, it describes the experience of the once famous, but now forgotten, Junior Republics started by William “Daddy” George, in which teenagers lived in a self-governing village as a model for consciously cultivating moral and civic education in the Tocquevillian mold. It concludes that we should enable children to engage in more free play with peers and that we should organize education to enable learners to practice the personal and civic virtues underpinning self-government in environments more like self-governing communities than factories for developing “human capital.”

Markets are widely recognized as sources of material wealth. There is, however, a widely expressed concern that the relationship between markets and human capital is an exploitative one, and the relationship between markets and human flourishing (beyond simply material well-being) is a negative one. We argue, however, that human capital and human flourishing depend on markets in ways that are underappreciated. This essay highlights the positive relationships between markets, human capital, and human flourishing. We first highlight the positive ways that markets foster human capital investments and development and then describe the various ways that markets promote human flourishing. Finally, we introduce Amartya Sen’s capability approach as a plausible and compelling evaluative framework for assessing the moral desirability of certain social arrangements and suggest that markets (on Sen’s terms) are morally desirable social arrangements because they promote human capital development and human flourishing.

Spatial inequalities in human capital are reshaping the politics of high-income democracies. However, comparative research on the political consequences of spatial inequality is constrained by a lack of data that is geographically detailed and cross-nationally comparable. This letter introduces the Regional Human Capital Database (RHCD), an open-access dataset covering 60,000 units in twenty wealthy democracies from the 1980s onward. The RHCD offers disaggregated data on educational attainment, demographics, urban structure, and voting, enabling analysis of within-region variation with unprecedented precision. We explain the construction of the dataset, including extensive checks to ensure reliability and validity. Our analysis demonstrates its value by showing growing urban–rural divides in educational attainment across countries with differing institutions and links between human capital and populist-right voting even within economically dynamic cities. The RHCD advances comparative research on the spatial dimensions of political change, offering a vital resource for scholars across political science and beyond.

Protecting biodiversity on the planet through business involvement is a priority for many governments and citizens. To do this requires balancing different social, financial, and ecological objectives with economic output. This editorial questions what is the right way to do this based on considering different forms of capital, such as natural, human, social, manufactured, and financial. This enables renewed interest in the natural environment in terms of business involvement in issues such as climate change and the circular economy.

How should resource-constrained manufacturers renew operations under mounting innovation pressure? We theorize and test a contingent model in which market pressure affects operational innovation indirectly through two pathways, technology investment (exploitation) and human-capital utilization (exploration), and in which firm size conditions both pathways. Using Eurobarometer 433 data on 2,213 European manufacturing firms, we estimate a conditional process model combining ordinary least squares and logistic regressions. We find a negative direct effect of pressure on operational innovation, but positive mediated effects via technology and human capital; the technology pathway is substantively stronger. Size matters: larger firms more effectively translate pressure into technology investment, whereas smaller firms rely relatively more on human capital, implying performance parity for sequential strategies when resources are tight. We contribute boundary conditions to ambidexterity theory and offer actionable guidance: small and medium-sized enterprises should sequence renewal by first mobilising human capabilities, then adding technologies; large firms can pursue ambidextrous investments.

The middle class is considered the most relevant group for formal volunteering. However, the middle class is shrinking, raising the question of the consequences for volunteering in general. Based on four samples of the Swiss Volunteering Survey from 2006, 2010, 2014, and 2019 containing over 5′000 individual responses, we test whether the intensity of middle-class volunteering changes over time. Our results show that the middle class is an essential source for formal volunteering compared to other parts of society, especially those with lower income. The relationship between the middle class and volunteering is positive, though non-significant in our samples. We found no significant changes over time in the volunteering development of the middle class.

Using data from the 2008 General Social Survey of Canada, this study examines the factors associated with individuals’ propensity to engage in formal and informal volunteering. The results show that social networks increase the likelihood of both formal and informal volunteering, but social trust and human capital increase only the likelihood of formal volunteering and not of informal care. The findings also reveal interesting cultural influences and regional differences in the propensity to engage in formal and informal volunteering, especially between French-speaking Canadians and English-speaking Canadians, and those living in Quebec and outside of Quebec. Native-born Canadians are more likely to volunteer than their immigrant counterparts, but they are similar to immigrants in the propensity to provide informal care. Additionally, women are found to be more likely to engage in formal volunteering and informal care than men. Theoretical and practical implications of the findings are discussed.

We examine the relationship between likelihood to volunteer and a range of human capital, social capital, religious capital and ubuntu variables in South Africa seven years after the official end of apartheid. Using the 2001 World Values Survey we find that education is positively associated with volunteering, but employment has a negative association with volunteering when including controls for wealth and income. Religiosity has a strong positive association with volunteering and a broad base, cutting across the socio-economic and racial divides. This suggest that religious congregations in collaboration with other sectors could be a vehicle to increase access to volunteer opportunities for those who lack the status to take part in other volunteering activities.

Empirical evidence from single-country studies on the relation between volunteering and wages is mixed. This paper uses an international framework to show that the relation between activities in voluntary associations and wages differs depending on country-specific factors. In particular, we argue that participating in voluntary associations serves as a signal in collectivistic (as opposed to individualistic) countries and is therefore positively related to wages. In countries with a low (as opposed to high) formal educational level, the human capital effects of participating are strong; therefore, activities in voluntary associations correlate with wages positively. Using data on 9295 individuals from 17 countries, we confirm that the relation between participating in voluntary associations and wage is positive but declines (1) as individualism increases and (2) as formal educational levels increase. In countries with high values for individualism or very high formal education levels, the relation between activities in voluntary associations and wage becomes negative.