Measuring the intangibles: testing the human capital theory against the OECD Programme for the International Assessment of Adult Competencies

The growing interest in human capital stems from the awareness that much of countries’ social and economic development depends on it. In particular, the literature states that a good supply of human capital can assure individuals: (i) more employment opportunities, (ii) higher wages, and consequently, at the aggregate level, and (iii) greater growth in countries’ wealth. In a number of transnational surveys (IALS 1994–1998; ALL 2003–2008; PIAAC 2011–2012), the OECD submitted a large sample of the adult population to questionnaire tests of their literacy, numeracy and capability of problem-solving. In this paper, I will first show the advantages and limits of using the skills assessed in the OEDC Survey of Adult Skills as human capital estimates. Second, using data from the most recent PIAAC survey, I will determine whether they provide more convincing support to the three assumptions of human capital theory.