IDEAS home Printed from
   My bibliography  Save this paper

The Merits of Ability in Developing and Developed Countries


  • Daniel Suryadarma


Different economic characteristics between developing and developed countries may require worker with different skills, resulting in different returns to the same ability. Moreover, it is also possible that different countries require different skills depending on their economic fundamentals. This paper provides evidence of the hypotheses above by comparing the labour market returns to numeracy and cognitive ability in Indonesia and the United States. In Indonesia, I find that numeracy has no significant effect on income, while general cognitive ability positively affects income. In the United States, meanwhile, I find that only mathematics ability is significant. Looking at the returns by sex, I find that the benefits of higher cognitive skills only pertain to males in Indonesia, while females have higher returns to numeracy than males in the United States. These results are robust to different specifications. Overall, these differences in returns to ability between Indonesia and the United States indicate that different economic structures indeed demand different sets of skills.

Suggested Citation

  • Daniel Suryadarma, 2010. "The Merits of Ability in Developing and Developed Countries," CEPR Discussion Papers 645, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  • Handle: RePEc:auu:dpaper:645

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Daniel Suryadarma & Sudarno Sumarto, 2011. "Survey of recent developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 47(2), pages 155-181.

    More about this item


    income; ability; mathematics; cognitive; Indonesia; United States;

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:auu:dpaper:645. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.