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

  • 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)

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.

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Paper provided by Department of Economics, Norwegian University of Science and Technology in its series Working Paper Series with number 9208.

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Length: 44 pages
Date of creation: 01 Mar 2008
Date of revision:
Handle: RePEc:nst:samfok:9208
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  1. Haegeland, Torbjorn & Klette, Tor Jakob & Salvanes, Kjell G, 1999. " Declining Returns to Education in Norway? Comparing Estimates across Cohorts, Sectors and Over Time," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(4), pages 555-76, December.
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