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The effect of early cognitive ability on earnings over the life-cycle

Author

Listed:
  • Torberg Falch

    (Department of Economics, Norwegian University of Science and Technology)

  • Sofia Sandgren

    (Royal Institute ofTechnology, Stockholm, Sweden, and Department of Economics, Norwegian University of Science and Technology, Norway)

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. Ability measured at an early age is not influenced by the individual’s choices of schooling and other circumstances. 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.

Suggested Citation

  • Torberg Falch & Sofia Sandgren, 2008. "The effect of early cognitive ability on earnings over the life-cycle," Working Paper Series 9208, Department of Economics, Norwegian University of Science and Technology.
    • Handle: RePEc:nst:samfok:9208
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    File URL: http://www.svt.ntnu.no/iso/WP/2008/1cog2a.pdf
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    Cited by:

    1. 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.
    2. 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.
    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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    Keywords

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    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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