Occupational Shifts and Human Capital Accumulation: The Role of Cognitive-Intensive Work in Economic Development

In this paper, I study the effects of the shifts in the occupational structure of the labor market on human capital accumulation. I provide evidence that, as countries develop, employment moves from routine-intensive to cognitive-intensive occupations. In addition, I show that cognitive occupations exhibit higher returns to human capital accumulation via education and experience. I develop a model of endogenous human capital accumulation and occupational choice, where workers optimally decide on their human capital investment profiles and career paths based on their skill endowments and time constraints, allowing for heterogeneous human capital accumulation technologies across occupations. I find that the shift in the occupational structure is a key driver of human capital differences across countries, playing a role that is quantitatively higher than cross-country gaps in educational attainment.