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The Changing Roles of Education and Ability in Wage Determination

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Listed author(s):
  • Gonzalo Castex
  • Evgenia Dechter

Abstract

This study examines changes in returns to formal education and cognitive skills over the last 20 years using the 1979 and 1997 waves of the National Longitudinal Survey of Youth. We show that cognitive skills had a 30%-60% larger effect on wages in the 1980s than in the 2000s. Returns to education were higher in the 2000s. These developments are not explained by changing distributions of workers’ observable characteristics or by changing labor market structure. We show that the decline in returns to ability can be attributed to differences in the growth rate of technology between the 1980s and 2000s.

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Paper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 704.

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Date of creation: Aug 2013
Handle: RePEc:chb:bcchwp:704
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  13. Gonzalo Castex, 2010. "Accounting for Changes in College Attendance Profile: a Quantitative Life-Cycle Analysis," Working Papers Central Bank of Chile 598, Central Bank of Chile.
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  23. Michael F. Lovenheim & C. Lockwood Reynolds, 2011. "Changes in Postsecondary Choices by Ability and Income: Evidence from the National Longitudinal Surveys of Youth," Journal of Human Capital, University of Chicago Press, vol. 5(1), pages 70-109.
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  26. John Cawley & James Heckman & Edward Vytlacil, 1998. "Understanding the Role of Cognitive Ability in Accounting for the Recent Rise in the Economic Return to Education," NBER Working Papers 6388, National Bureau of Economic Research, Inc.
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Cited by:

  1. Paul Beaudry & David A. Green & Benjamin M. Sand, 2016. "The Great Reversal in the Demand for Skill and Cognitive Tasks," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 199-247.
  2. Brad J. Hershbein & Lisa B. Kahn, 2016. "Do Recessions Accelerate Routine-Biased Technological Change? Evidence from Vacancy Postings," Upjohn Working Papers and Journal Articles 16-254, W.E. Upjohn Institute for Employment Research.
  3. Joshua Goodman, 2017. "The Labor of Division: Returns to Compulsory High School Math Coursework," NBER Working Papers 23063, National Bureau of Economic Research, Inc.
  4. d'Haultfoeuille, Xavier & Maurel, Arnaud & Zhang, Yichong, 2014. "Extremal Quantile Regressions for Selection Models and the Black-White Wage Gap," IZA Discussion Papers 8256, Institute for the Study of Labor (IZA).
  5. Richey, Jeremiah & Rosburg, Alicia, 2014. "Human capital and trends in the transmission of economic status across generations in the U.S," MPRA Paper 60113, University Library of Munich, Germany.
  6. David J. Deming, 2015. "The Growing Importance of Social Skills in the Labor Market," NBER Working Papers 21473, National Bureau of Economic Research, Inc.

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