Work Experience Can Build Human Capital as Powerfully as Formal Education

Education is widely recognized as a foundation for developing human capital, but new analysis from the World Bank highlights another important source of productivity: experience gained through work.

According to the latest Human Capital Index Plus (HCI+) analysis, a worker with around 30 years of experience in a wage job can be roughly 2.5 times as productive as someone at the beginning of their working life. The World Bank says this productivity gain is broadly comparable to the contribution associated with completing about 12 years of average-quality schooling.

The finding underlines a broader idea: employment does not simply provide a place where existing skills are used. Work itself can become an important environment for developing new capabilities.

Experience Creates New Skills

Human capital includes the knowledge, abilities and skills that allow people to become productive participants in an economy. Schooling is one major way these capabilities are developed, but learning does not necessarily stop when formal education ends.

Workers can continue learning through practical experience, workplace training, problem-solving, collaboration and increasing responsibility.

The World Bank’s HCI+ methodology estimates an average return of about 3% per year of wage-employment experience during working age. Under this framework, 30 years of experience corresponds to a productivity level approximately 2.5 times that of someone starting their working life.

This does not mean every individual worker will experience exactly the same productivity increase. The calculation is an economic model based on estimated returns to experience rather than a prediction for a particular employee.

Learning Continues After School

The findings add another dimension to the way human capital is measured.

Traditional measures often emphasize years of education, learning outcomes and health. The HCI+ attempts to follow human capital through people’s working lives, incorporating employment and workplace experience into the assessment.

This approach recognizes that skills can accumulate over decades. Someone who has spent years working in a profession may develop knowledge that cannot be acquired entirely through classroom education.

A new employee, for example, may understand the theoretical aspects of a job but still need time to learn how to handle real-world situations. Experience can gradually improve decision-making, efficiency and the ability to solve unfamiliar problems.

The Quality of Employment Matters

The analysis also points to an important distinction between simply having a job and having opportunities to learn through employment.

The World Bank’s HCI+ methodology assigns different estimated returns to wage and non-wage employment. It also notes that returns from experience tend to be higher earlier in a career and become smaller later in working life.

This means that employment can contribute to human-capital development, but the nature of the job and the opportunities available to workers can influence how much additional learning takes place.

Jobs that expose workers to new technologies, responsibilities and complex tasks may provide different learning opportunities from work that involves highly repetitive activities.

Why This Matters for Economies

The relationship between employment and human capital has implications beyond individual careers.

When workers accumulate skills and experience, businesses can benefit from greater productivity, while economies can gain from a more capable workforce. This makes the transition from education into employment an important stage of human-capital development.

The World Bank’s latest HCI+ analysis also uses this perspective to examine differences in employment and human-capital accumulation between men and women. Its data show that employment and work experience can substantially influence lifetime human-capital outcomes.

The broader message is that human-capital development should not be viewed as something that ends when a student leaves school or university.

From Classroom to Workplace

Education and employment therefore play complementary roles.

Schools and universities provide foundational knowledge and skills, while workplaces can provide opportunities to apply those skills and develop additional capabilities through experience.

For policymakers, this creates a case for considering not only access to education but also the availability of productive employment and opportunities for workers to continue learning.

The HCI+ framework provides tools for examining these relationships across countries and identifying how health, education and employment contribute to human-capital development.

Ultimately, the latest findings reinforce a simple economic principle: people continue to build skills after leaving the classroom. A career can become a long-term learning process, with accumulated workplace experience contributing substantially to productivity over time.