ABSTRACT
The human capital theory developed in the middle of the 20th century states that people can improve their future income by enhancing their own “ability”, but the connotations of “ability” have always remained a black box in research. In the traditional Walrasian model, “ability” is assumed to be cognitive and closely related to productive capacity, while noncognitive factors have always been ignored. This view limits the explanatory power of human capital theory. This chapter expands the connotations of human capital by exploring the value of noncognitive skills and their production patterns.
