Page 15 - Education for Development:George Psacharopoulos University of Illinois at Urbana-Champaign, USA

Education for Development: What Policies?c13

2002; Vawda, 2003).

The soft skills

Research has shown that employers want to hire workers who possess
very general, rather than specific, skills. General skills make workers easily
trainable for unforeseen occupations in the future (Murnane and Levy, 1996).

Soft skills, such as personality, goals, motivations, and preferences are valued
and rewarded in the labor market (Heckman and Kautz, 2012). In addition, civic
behavior, especially as manifested by trusting others, has an economic value.

Civics cultivates interpersonal skills to tolerate others that, among other things,
promote social and economic stability, conflict resolution, voting participation,
democracy and better governance (Gallego, 2010; Temple, 2001). A higher

level of trust in a society facilitates investment and lowers the cost of market
transactions (Sequeira et al., 2011; Knack and Keefer, 1997).
Arrow (1972) linked social capital to economic outcomes, noting that

virtually every commercial transaction has within itself an element of trust,
and argued that much of the economic backwardness in the world might be
explained by the lack of mutual confidence. Fukuyama (1995) noted that distrust

in a society imposes a kind of tax on all forms of economic activity.
In a cross-country study, using data from the World Value Survey, Knack
and Keefer (1997) found that a 10% increase in their measure of trust leads to a

0.8 percentage point increase in the rate of economic growth.
Dincer and Uslaner (2010) using data from U.S. states over a 5-years
period and controlling endogeneity, found that a 10 percentage point increase in

trust increases the GDP growth rate of by 0.5 percentage points over a five-year
period. In the United States, trust explains nearly one-half of the variation of the