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Iq In The Production Function: Evidence From Immigrant Earnings

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  • GARETT JONES
  • W. JOEL SCHNEIDER

Abstract

"We show that a country's average IQ score is a useful predictor of the wages that immigrants from that country earn in the United States, whether or not one adjusts for immigrant education. Just as in numerous microeconomic studies, 1 IQ point predicts 1% higher wages, suggesting that IQ tests capture an important difference in cross-country worker productivity. In a cross-country development accounting exercise, about one-sixth of the global inequality in log income can be explained by the effect of large, persistent differences in national average IQ on the private marginal product of labor. This suggests that cognitive skills matter more for groups than for individuals." ("JEL" J24, J61, O47) Copyright (c) 2009 Western Economic Association International.

Suggested Citation

  • Garett Jones & W. Joel Schneider, 2010. "Iq In The Production Function: Evidence From Immigrant Earnings," Economic Inquiry, Western Economic Association International, vol. 48(3), pages 743-755, July.
  • Handle: RePEc:bla:ecinqu:v:48:y:2010:i:3:p:743-755
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    References listed on IDEAS

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    1. Jeffrey S. Zax & Daniel I. Rees, 2002. "IQ, Academic Performance, Environment, and Earnings," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 600-616, November.
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    4. Neal, Derek A & Johnson, William R, 1996. "The Role of Premarket Factors in Black-White Wage Differences," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 869-895, October.
    5. Bishop, John Hillman, 1989. "Is the Test Score Decline Responsible for the Productivity Growth Decline?," American Economic Review, American Economic Association, vol. 79(1), pages 178-197, March.
    6. Tine Dhont & Freddy Heylen, 2008. "Why Do Europeans Work (Much) Less? It Is Taxes And Government Spending," Economic Inquiry, Western Economic Association International, vol. 46(2), pages 197-207, April.
    7. Jerik Hanushek & Dennis Kimko, 2006. "Schooling, Labor-force Quality, and the Growth of Nations," Educational Studies, Higher School of Economics, issue 1, pages 154-193.
    8. Ram, Rati, 2007. "IQ and economic growth: Further augmentation of Mankiw-Romer-Weil model," Economics Letters, Elsevier, vol. 94(1), pages 7-11, January.
    9. Garett Jones & W. Schneider, 2006. "Intelligence, Human Capital, and Economic Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach," Journal of Economic Growth, Springer, vol. 11(1), pages 71-93, March.
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    Citations

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    Cited by:

    1. Oasis Kodila-Tedika & Julius Agbor, 2016. "Does Trust Matter for Entrepreneurship: Evidence from a Cross-Section of Countries," Economies, MDPI, Open Access Journal, vol. 4(1), pages 1-17, March.
    2. Burhan, Nik Ahmad Sufian & Che Razak, Razli & Salleh, Fauzilah & Labastida Tovar, María Elena, 2017. "Intelligence and the Ease of Doing Business: Does Intellectual Class Facilitate Leadership and Entrepreneurship?," MPRA Paper 77503, University Library of Munich, Germany.
    3. Burhan, Nik Ahmad Sufian & Salleh, Fauzilah & Burhan, Nik Mohd Ghazi, 2015. "National Intelligence and Private Health Expenditure: Do High IQ Societies Spend More on Health Insurance?," MPRA Paper 77328, University Library of Munich, Germany.
    4. Potrafke, Niklas, 2012. "Intelligence and corruption," Economics Letters, Elsevier, vol. 114(1), pages 109-112.
    5. Burhan, Nik Ahmad Sufian & Che Razak, Razli & Rosli, Muhamad Ridhwan & Selamat, Muhamad Rosli, 2017. "The Bell Curve of Intelligence, Economic Growth and Technological Achievement: How Robust is the Cross-Country Evidence?," MPRA Paper 77469, University Library of Munich, Germany.
    6. Proto, Eugenio & Rustichini, Aldo & Sofianos, Andis, 2014. "Higher Intelligence Groups Have Higher Cooperation Rates in the Repeated Prisoner's Dilemma," IZA Discussion Papers 8499, Institute for the Study of Labor (IZA).
    7. Isaac Kalonda-Kanyama & Oasis Kodila-Tedika, 2012. "Quality of Institutions : Does Intelligence Matter?," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 201206, University of Kansas, Department of Economics, revised Apr 2012.
    8. Oasis Kodila-Tedika, 2014. "Governance and Intelligence: Empirical Analysis from African Data," Journal of African Development, African Finance and Economic Association, vol. 16(1), pages 83-97.
    9. Morgan Kelly & Joel Mokyr & Cormac Ó Gráda, 2014. "Precocious Albion: A New Interpretation of the British Industrial Revolution," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 363-389, August.
    10. Burhan, Nik Ahmad Sufian & Che Razak, Razli & Selamat, Muhamad Rosli & Rosli, Muhamad Ridhwan, 2017. "Intellectual Giftedness for Leadership: How Robust is the Crime Reducing Effect of Intellectual Class?," MPRA Paper 77467, University Library of Munich, Germany.
    11. Garett Jones & Niklas Potrafke, 2014. "Human Capital and National Institutional Quality: Are TIMSS, PISA, and National Average IQ Robust Predictors?," CESifo Working Paper Series 4790, CESifo Group Munich.
    12. Jones, Garett, 2013. "The O-ring sector and the Foolproof sector: An explanation for skill externalities," Journal of Economic Behavior & Organization, Elsevier, vol. 85(C), pages 1-10.
    13. Eugenio Proto & Aldo Rustichini & Andis Sofianos, 2016. "Intelligence, Personality and Gains from Cooperation in Repeated Interactions," CESifo Working Paper Series 6121, CESifo Group Munich.
    14. Burhan, Nik Ahmad Sufian & Kurniawan, Yohan & Sidek, Abdul Halim & Mohamad, Mohd Rosli, 2014. "Crimes and the Bell Curve: The Role of People with High, Average, and Low Intelligence," MPRA Paper 77314, University Library of Munich, Germany.
    15. Jones, Garett, 2012. "Cognitive skill and technology diffusion: An empirical test," Economic Systems, Elsevier, vol. 36(3), pages 444-460.
    16. Salahodjaev, Raufhon, 2015. "Intelligence and finance," MPRA Paper 68950, University Library of Munich, Germany.
    17. R. Hafer & Garett Jones, 2015. "Are entrepreneurship and cognitive skills related? Some international evidence," Small Business Economics, Springer, vol. 44(2), pages 283-298, February.
    18. Burhan, Nik Ahmad Sufian & Sidek, Abdul Halim & Kurniawan, Yohan & Mohamad, Mohd Rosli, 2014. "Has Globalization Triggered Collective Impact of National Intelligence on Economic Growth?," MPRA Paper 77316, University Library of Munich, Germany.
    19. Burhan, Nik Ahmad Sufian & Mohamad, Mohd Rosli & Kurniawan, Yohan & Sidek, Abdul Halim, 2014. "The Impact of Low, Average, and High IQ on Economic Growth and Technological Progress: Do All Individuals Contribute Equally?," MPRA Paper 77321, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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