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Cognitive performance and labour market outcomes

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  • Lin, Dajun
  • Lutter, Randall
  • Ruhm, Christopher J.

Abstract

We use the U.S. National Longitudinal Survey of Youth 1979 and other sources to examine how cognitive performance near the end of secondary schooling relates to labour market outcomes through age fifty. Our preferred estimates control for individual and family backgrounds, non-cognitive attributes, and survey years. We find that returns to cognitive skills rise with age. Although estimated gains in lifetime incomes are close to those reported earlier, our preferred estimates make multiple offsetting improvements. Returns to cognitive skill are greater for blacks and Hispanics than for non-Hispanic whites, both in relative and absolute terms, with gains in work hours being more important than in hourly wages.

Suggested Citation

  • Lin, Dajun & Lutter, Randall & Ruhm, Christopher J., 2018. "Cognitive performance and labour market outcomes," Labour Economics, Elsevier, vol. 51(C), pages 121-135.
    • Handle: RePEc:eee:labeco:v:51:y:2018:i:c:p:121-135
    DOI: 10.1016/j.labeco.2017.12.008
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    3. Ksenia Rozhkova & Sergey Roshchin, 2021. "The Impact of Non-Cognitive Characteristics on the Higher Education Choice-Making: An Economist Perspective," Voprosy obrazovaniya / Educational Studies Moscow, National Research University Higher School of Economics, issue 3, pages 138-167.
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    6. Atkins, Rose & Turner, Alex James & Chandola, Tarani & Sutton, Matt, 2020. "Going beyond the mean in examining relationships of adolescent non-cognitive skills with health-related quality of life and biomarkers in later-life," Economics & Human Biology, Elsevier, vol. 39(C).
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    9. Nikolov, Plamen & Jimi, Nusrat & Chang, Jerray, 2020. "The Importance of Cognitive Domains and the Returns to Schooling in South Africa: Evidence from Two Labor Surveys," Labour Economics, Elsevier, vol. 65(C).
    10. Dennis Epple & Francisco Martinez-Mora & Richard Romano, 2021. "Charter School Practices and Student Selection: An Equilibrium Analysis," NBER Working Papers 29529, National Bureau of Economic Research, Inc.
    11. Gong, Xiaodong & Zhu, Rong, 2019. "Cognitive abilities, non-cognitive skills, and gambling behaviors," Journal of Economic Behavior & Organization, Elsevier, vol. 165(C), pages 51-69.
    12. Fraas, Arthur G. & Lutter, Randall & Murphy, Joshua & Xiahou, Qinrui & Potter, Jeff & Gosling, Samuel D., 2023. "Effects of Early Childhood Exposure to Ambient Lead and Particulate Matter on Adult Personality," RFF Working Paper Series 23-17, Resources for the Future.
    13. de Hoyos, Rafael & Estrada, Ricardo & Vargas, María José, 2021. "What do test scores really capture? Evidence from a large-scale student assessment in Mexico," World Development, Elsevier, vol. 146(C).
    14. Laura E. Henkhaus, 2022. "The lasting consequences of childhood sexual abuse on human capital and economic well‐being," Health Economics, John Wiley & Sons, Ltd., vol. 31(9), pages 1954-1972, September.
    15. Buchmueller, Gerda & Walker, Ian, 2020. "The Graduate Wage and Earnings Premia and the Role of Non-Cognitive Skills," IZA Discussion Papers 13248, Institute of Labor Economics (IZA).
    16. Jerry Hausman & Haoyang Liu & Ye Luo & Christopher Palmer, 2021. "Errors in the Dependent Variable of Quantile Regression Models," Econometrica, Econometric Society, vol. 89(2), pages 849-873, March.
    17. Davillas, Apostolos & de Oliveira, Victor Hugo & Jones, Andrew M., 2023. "Is inconsistent reporting of self-assessed health persistent and systematic? Evidence from the UKHLS," Economics & Human Biology, Elsevier, vol. 49(C).
    18. Nejad, Maryam Naghsh & Schurer, Stefanie, 2022. "Cognitive and non-cognitive abilities of immigrants: New perspectives on migrant quality from a selective immigration country," Journal of Economic Behavior & Organization, Elsevier, vol. 203(C), pages 107-124.
    19. Lisa Meehan & Gail Pacheco & Thomas Schober, 2023. "Basic Reading and Mathematics Skills and the Labour Market Outcomes of Young People: Evidence from PISA and Linked Administrative Data," The Economic Record, The Economic Society of Australia, vol. 99(327), pages 473-491, December.
    20. Vu, Tien Manh & Yamada, Hiroyuki, 2022. "Returns to test scores in Vietnam," MPRA Paper 111714, University Library of Munich, Germany.
    21. Mohitosh Kejriwal & Xiaoxiao Li & Linh Nguyen & Evan Totty, 2024. "The efficacy of ability proxies for estimating the returns to schooling: A factor model‐based evaluation," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 39(1), pages 3-21, January.
    22. Рожкова К. В. & Рощин С. Ю., 2021. "Влияние Некогнитивных Характеристик На Выбор Траекторий В Высшем Образовании: Взгляд Экономистов," Вопросы образования // Educational Studies Moscow, National Research University Higher School of Economics, issue 3, pages 138-167.
    23. Wiedner, Jonas & Schaeffer, Merlin, 2020. "Career trajectories into undereducation. Which skills and resources substitute formal education in the intergenerational transmission of advantage?," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 68, pages 1-1.
    24. Luthra, Renee Reichl & Platt, Lucinda, 2023. "Do immigrants benefit from selection? Migrant educational selectivity and its association with social networks, skills and health," LSE Research Online Documents on Economics 118629, London School of Economics and Political Science, LSE Library.
    25. Ashley Pullman & Britta Gauly & Clemens M. Lechner, 2021. "Short-term earnings mobility in the Canadian and German context: the role of cognitive skills," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 55(1), pages 1-19, December.

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    More about this item

    Keywords

    IQ; Cognitive skills; Work; Lifetime income;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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