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The Effect of Early Cognitive Ability on Earnings Over the Life-Cycle

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  • Torberg Falch
  • Sofia Sandgren Massih

Abstract

This paper utilizes information on cognitive ability at age ten and earnings information from age 20 to 65 to estimate the return to ability over the life-cycle. Cognitive ability measured at an early age is not influenced by the individual’s choices of schooling. We find that most of the unconditional return to early cognitive ability goes through educational choice. The conditional return is increasing for low levels of experience and non-increasing for experience above about 15-25 years. The return is similar for men and women, and highest for individuals with academic education. Only a small part of the return can be explained by higher probability to have a supervisory position.
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Suggested Citation

  • Torberg Falch & Sofia Sandgren Massih, 2012. "The Effect of Early Cognitive Ability on Earnings Over the Life-Cycle," LABOUR, CEIS, vol. 26(3), pages 287-312, September.
    • Handle: RePEc:bla:labour:v:26:y:2012:i:3:p:287-312
    DOI: j.1467-9914.2012.00553.x
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    File URL: http://hdl.handle.net/10.1111/j.1467-9914.2012.00553.x
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    1. Torbjørn Haegeland & Tor Jakob Klette & Kjell G. Salvanes, 1999. "Declining Returns to Education in Norway? Comparing Estimates across Cohorts, Sectors and over Time," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(4), pages 555-576, December.
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    Cited by:

    1. Forslund, Anders & Fredriksson, Peter, 2009. "Income support systems, labour supply incentives and employment – some cross-country evidence," Working Paper Series 2009:32, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    2. Torberg Falch & Sofia Sandgren Massih, 2011. "The Effect Of Education On Cognitive Ability," Economic Inquiry, Western Economic Association International, vol. 49(3), pages 838-856, July.
    3. Malmberg, Jonas, 2010. "Posting Post Laval International and National Responses," Working Paper Series, Center for Labor Studies 2010:5, Uppsala University, Department of Economics.

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    More about this item

    JEL classification:

    • I29 - Health, Education, and Welfare - - Education - - - Other
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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