Human Capital and Leadership: The Impact of Cognitive and Noncognitive Abilities

We conduct an economic analysis about the impact of human capital on an individual’s potential of becoming a leader. The data come from the recent Programme for the International Assessment of Adult Competencies survey (PIAAC). Our human capital indicators include not only traditional measures such as education and experience, but also various measures of cognitive and noncognitive ability. We specifically investigate the effect of imperfect ability measurement and possible reverse causality on the estimation results. We find that, among various cognitive and noncognitive ability measures, problem-solving ability and perseverance are the most important in affecting an individual’s leadership.