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The Creativity Premium

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Listed:
  • Gill, David

    (Purdue University)

  • Prowse, Victoria L.

    (Purdue University)

Abstract

Success in life increasingly depends on key skills that allow people to thrive in education, the labor market, and their interactions with others. In this paper, we emphasize creativity as a key skill that is essential to open-ended problem solving and resistant to automation. We use rich longitudinal data to study the relationship between people's creativity measured in childhood and their individual attributes and life outcomes. We find that childhood creativity predicts labor market and educational success: more creative individuals earn more during the course of their careers, work in higher occupational categories, and reach higher levels of educational attainment. Our analysis of attributes further suggests that creative individuals have a package of practical skills that allows them to thrive in work environments where learning from experience is important. We combine insights from our findings with evidence from psychology to propose creativity-improving interventions that could lead to substantial economic benefits.

Suggested Citation

  • Gill, David & Prowse, Victoria L., 2021. "The Creativity Premium," IZA Discussion Papers 14421, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp14421
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    References listed on IDEAS

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    1. David Mcgranahan & Timothy Wojan, 2007. "Recasting the Creative Class to Examine Growth Processes in Rural and Urban Counties," Regional Studies, Taylor & Francis Journals, vol. 41(2), pages 197-216.
    2. Eduardo Fé & David Gill & Victoria Prowse, 2022. "Cognitive Skills, Strategic Sophistication, and Life Outcomes," Journal of Political Economy, University of Chicago Press, vol. 130(10), pages 2643-2704.
    3. Florian Ederer & Gustavo Manso, 2013. "Is Pay for Performance Detrimental to Innovation?," Management Science, INFORMS, vol. 59(7), pages 1496-1513, July.
    4. Katharina Eckartz & Oliver Kirchkamp & Daniel Schunk, 2012. "How do Incentives Affect Creativity?," CESifo Working Paper Series 4049, CESifo.
    5. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    6. Charlotta Mellander & Richard Florida, 2011. "Creativity, talent, and regional wages in Sweden," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 46(3), pages 637-660, June.
    7. Glenn Dutcher & Cortney S. Rodet, 2022. "Which two heads are better than one? Uncovering the positive effects of diversity in creative teams," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(4), pages 884-897, November.
    8. Sanjiv Erat & Uri Gneezy, 2016. "Incentives for creativity," Experimental Economics, Springer;Economic Science Association, vol. 19(2), pages 269-280, June.
    9. Ann Markusen, 2006. "Urban Development and the Politics of a Creative Class: Evidence from a Study of Artists," Environment and Planning A, , vol. 38(10), pages 1921-1940, October.
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    Cited by:

    1. van Lent, Max, 2024. "Peer Creativity and Academic Achievement," IZA Discussion Papers 16847, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    creativity; skills; life outcomes; children; longitudinal; labor market; wages; earnings; occupational category; educational attainment; practical skills; experience; cognitive ability; human capital;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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