Competencies: requirements and acquisition

Higher education is given the key task to prepare the highly talented among the young to fulfil highly qualified roles in the labour market. Successful labour market performance of graduates is generally associated with the acquisition of the correct competencies. Education as an individual investment in human capital is a viewpoint dating back to the 17th century and the writings of Sir William Petty (1662), and includes later work by Adam Smith (1776). The idea was formalized and brought into mainstream economics by Schultz (1961), Becker (1964) and Mincer (1970, 1974). The strong supply-side orientation of the human capital theory’s determination of labour productivity has also raised serious doubts. One of the first major competitors of the human capital theory was the job competition model (Thurow, 1975), in its most extreme form explaining productivity entirely by occupational characteristics. Both the human capital theory and the job competition model in their original versions seem to be too restricted to one side of the labour market. More recently, therefore, approaches that allow explicitly for an interaction between supply-side and demand-side characteristics (‘assignment models’) have been placed centrally in analyses of education-to-work stages. For a good overview of different assignment models and their distinctive features with respect to matching models, such as proposed by Mortensen (1986), or search theories (e.g. Jovanovic, 1979), see Dupuy (2004).