**Returns to Skills.** Human capital investments produce returns only if they generate valuable skills. Unpacking the process moving from investments to skills formation to returns implies measuring these skills at different points of the accumulation process.

Many empirical works in this area use the _Programme for the International Assessment of Adult Competences_ (PIAAC) survey to measure adult skills. PIAAC is developed by the OECD to measure cognitive skills that are considered necessary to be a productive worker and a participating member of society. PIAAC also provides measures that are comparable internationally. Hanusheck et al. (2016) perform cross-country regressions on 31 countries. They estimate increases in gross hourly wages as a result of a standard deviation increase in the numeracy score. The estimated returns range from 9.4% (with full controls) to 19.9% (with only country fixed effects controls). OECD (2016) uses the same survey on all 33 participant countries in 2014-2015 concluding that one standard deviation more on the literacy scale increase the probability to be employed by 0.8 percentage point and is associated with a 6% increase in wages.

However, cognitive skills are just one of the possible skills relevant in the human capital accumulation process. Recently, economists have followed other social scientists in recognizing the importance of personality traits, or non-cognitive skills, as important components of human capital and, ultimately, labor productivity.<sup>16</sup> Non-cognitive skills can be defined as components of human behavior, including thoughts and feelings, which are important in inter-personal and social interactions. A typical taxonomy adopted from Psychologists includes the _Big Five_ of personality traits: openness, conscientiousness, extraversion, agreeableness, and neuroticism (emotional stability). Specific traits that have proved to be particular important for labor productivity are self-esteem and locus of control, which are strongly associated with conscientiousness and emotional stability [Almlund et al. (2011)]. Glewwe et al. (2016) is one of the first contribution considering both cognitive and non-cognitive skills measured in the early years as predictors of outcomes in a developing country. They focus on China's poorest provinces estimating that both types of skills are important to predict education attainment. When education attainment is controlled for, however, they are not strong predictors of early labor market outcomes.

**Returns to Experience and Seniority.** Human capital accumulation continues once individuals transit from schooling to the labor market since working at a given job involves important learning processes. A standard proxy used to capture the overall return of this human capital accumulation is the years of work experience accumulated by a given worker. A typical specification is the so called _Mincerian regressions_ [Mincer (1971)] where log wages are regressed on years of schooling _si_ and years of work experience _ei_ , linear and squared:

> 16 For a review, see Almlund et al. (2011). For an early example applied to labor productivity, see Heckman et al. (2006). For an important data collection initiative focusing on middle- and low-income countries see the World Bank's _STEP Skills Measurement Program_ (STEP) [Pierre et al. (2014)].

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