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Cognitive Ability, Wages, and Meritocracy

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Author Info

  • 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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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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Handle: RePEc:nbr:nberwo:5645

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  1. 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.
  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. 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.
  4. 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.
  5. 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.
  6. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
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