Cognitive abilities and income: preliminary evidence from a developing country

Purpose - Related literature finds that human capital proxied by cognitive abilities is an important antecedent of numerous specific life outcomes. The purpose of this study is to extend existing evidence by investigating the link between cognitive skills and income in Tajikistan. Tajikistan is a landlocked low-income country situated in Central Asia. Its population is 9.1 million people and gross domestic product per capita of US$822. According to the World Bank, Tajikistan has made significant progress in decreasing poverty levels from 83% in 2000 to 29.5% in 2017. Design/methodology/approach - The data for this study comes from the 2013 Jobs, Skills and Migration Survey conducted by the World Bank and the German Society for International Cooperation. The main explanatory variable of the study is the cognitive abilities index of the respondents. The survey used item response theory (IRT) approach to estimate the ability of respondents. IRT is a method or a set of statistical frameworks, used to explore assessment item data, such as cognitive abilities assessment data. The wage function was estimated using the ordinary least squares method because the results are easier to interpret (Jencks, 1979; Bowleset al., 2001; Groves, 2006). Findings - The baseline results are reported in Table 2. The results in Column 1 demonstrated the link between cognitive abilities and income without control variables (unconditional model). As expected, cognitive abilities are positively and significantly related to income (a1 = 0.0715,p