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Cognitive Ability, Wages, and Meritocracy

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  • John Cawley
  • Karen Conneely
  • James Heckman
  • Edward Vytlacil

Abstract

This paper presents new evidence from the NLSY on the importance of meritocracy in American society. In it, we find that general intelligence, or g -- a measure of cognitive ability--is dominant in explaining test score variance. The weights assigned to tests by g are similar for all major demographic groups. These results support Spearman's theory of g. We also find that g and other measures of ability are not rewarded equally across race and gender, evidence against the view that the labor market is organized on meritocratic principles. Additional factors beyond g are required to explain wages and occupational choice. However, both blue collar and white collar wages are poorly predicted by g or even multiple measures of ability. Observed cognitive ability is only a minor predictor of social performance. White collar wages are more g loaded than blue collar wages. Many noncognitive factors determine blue collar wages.

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File URL: http://www.nber.org/papers/w5645.pdf
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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5645.

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Date of creation: Jul 1996
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Publication status: published as Cawley, John, Karen Conneely, James Heckman, and Edward Vytlacil. "Cognitive Ability, Wages, and Meritocracy." In Intelligence, Genes, and Success: Scientists Respond to The Bell Curve, edited by Bernie Devlin, Stephen Fienberg, Daniel Resnick, and Kathryn Roeder. (Springer Verlag: New York), 1997.
Handle: RePEc:nbr:nberwo:5645

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  1. McKinley L. Blackburn & David Neumark, 1991. "Omitted-Ability Bias and the Increase in the Return to Schooling," NBER Working Papers 3693, National Bureau of Economic Research, Inc.
  2. Heckman, James J, 1995. "Lessons from the Bell Curve," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 1091-1120, October.
  3. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
  4. Murnane, Richard J & Willett, John B & Levy, Frank, 1995. "The Growing Importance of Cognitive Skills in Wage Determination," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 251-66, May.
  5. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
  6. Jeff Grogger & Eric Eide, 1995. "Changes in College Skills and the Rise in the College Wage Premium," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 280-310.
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