# **1. Introduction**

The existing literature extensively documents positive correlations between human capital and economic outcomes. Traditionally, such studies of human capital have primarily centered on assets that can be readily observed, such as physical health or documented educational attainment (see Deaton, 2003; Angrist and Lavy, 1999; Duflo, 2001; Miguel and Kremer, 2004; Nehru et al., 1995; Baldacci et al., 2008). This provides a rather limited perspective in light of the broad definition of human capital as the stock of skills that the labor force possesses and is regarded as a resource or asset (Goldin, 2016).

Yet a mounting body of international evidence points to the importance of ‘socialemotional’ or psychological capital, especially among young people, in contributing to various outcomes ranging from academic performance during adolescence (Becker and Luther, 2002) to earnings (see review in Goodman et al, 2015) and lower financial distress in adulthood (Kuhnen & Melzer, 2014). The evidence appears to suggest significant benefits of higher adolescent social-emotional capital for later-life outcomes and opportunities. However, much of this evidence is obtained in the context of developed countries such as the United States, United Kingdom, Germany, Australia, etc. The importance or relevance of such skills in the context of poorer, developing countries remains unclear, and requires further examination, especially given the significant binding constraints individuals in such countries face in terms of access to education and labor markets to begin with.

This paper attempts to contribute to filling this gap by documenting the role played by social-emotional capital in explaining the education and labor market aspirations of the adolescents in India. Our focus on aspirations in these two domains as our key dependent variables, rather than actual attainment, is motivated by the fact that previous studies have argued that adolescent aspirations for the future are important predictors of adult attainment. For example, it has been shown that young people with high employment aspirations are more likely to enter a professional career in adulthood (Clausen, 1993; Mello, 2008; Schoon, Martin, & Ross, 2007; Schoon & Parsons, 2002). Similarly, a number of studies in Australia and the United Kingdom have identified a ‘lack of aspiration’ as being one of the key barriers to participation in further education for poorer students (Bradley et al. 2008; James et al. 2008; Goodman and Gregg, 2010). Hence, despite their subjective nature, focusing on aspirations may be argued to constitute the first step in analyzing the overall impact of social-emotional capital on adult attainments.

The primary dimension of social-emotional capital we focus on in this paper is selfefficacy. In behavioral psychology, self-efficacy refers to an individual’s self-belief that they can accomplish a given task and cope with life’s challenges (Bandura 1977). Selfefficacy has been recognized as an important constituent of psychological empowerment (Ibrahim & Alkire, 2007; Zimmerman, 2000). It can be manifested through various elements of personal behavior, such as how well a person perseveres in the face of adversity, whether they have an optimistic or pessimistic attitude about their future, etc. In addition, we also look at self-reported measures of depression and hope as alternative expressions of social-emotional capital.

We use a recent World Bank survey of 3,942 adolescent girls and young women in the 2