On the topic of life skills Michele Borba's book "UnSelfie: Why Empathetic Kids Succeed in Our All-About-Me World" is one of my favorites. It presents a case for why empathy is a critical skill and how it can be fostered in children.
Professionally as a Product Manager empathy is something I'm continually honing and practicing. My responsibility is to determine the stakeholder's (e.g. user's, team member's) need. Out of all the things we can build given a constrained set of time and resources, which ones will have the greatest value? I must put myself into the position of the stakeholder in order to understand their need. I must empathize.
Unknowing I began to foster my ability to empathize at a young age. One of my favorite games was setting up and acting out movie like scenes with my G. I. Joe action figures. I'd imagine elaborate worlds and scenes where my hero would fall under duress and battle his way through to redemption. I imagined what he was feeling, what his allies were feeling, what the villains were feeling. I'd act out the scenes, conversations, and of course the action. I'd stretch out the scenes imagining my hero experiencing a range of emotions. It was exciting to create these scenes in my mind. And as I let my imagination flow I was honing my ability to empathize.
Imagination is a pre-requisite for empathy. You cannot empathize with someone if you can't imagine what they feel or need. I believe if we want a child to develop empathy, we must encourage them to use their imagination. The how they do it is not important. It could be playing a video game where they have a connection to emotional state of the characters in the game. It could be watching a film, reading a book, or creating a fictitious world with G.I. Joes. Put them in a situation where the mind starts imagining and they'll begin to empathize with their environment.