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Cognitive Performance and Labour Market Outcomes

Author

Listed:
  • Dajun Lin
  • Randall Lutter
  • Christopher Ruhm
Abstract
This paper uses information from the National Longitudinal Survey of Youth 1979 (NLSY79) and supplementary data sources to examine how cognitive performance, measured at approximately the end of secondary schooling, is related to the labour market outcomes of 20 through 50 year olds. The analysis reveals five main findings. First, cognitive performance is positively associated with future labour market outcomes at all ages. Second, the returns to cognitive skill increase with age. Third, the effect on total incomes reflects a combination of positive impacts of cognitive performance for both hourly wages and annual work hours. Fourth, the returns to cognitive skill are greater for women than men and for blacks and Hispanics than for non-Hispanic whites, with differential effects on work hours being more important than corresponding changes in hourly wages. Fifth, the average gains in lifetime incomes predicted to result from greater levels of cognitive performance are only slightly above those reported in prior studies but the effects are heterogeneous, with larger relative and absolute increases, in most models, for non-whites or Hispanics than for non-Hispanic whites, and higher relative but not absolute returns for women than men. [Working Paper 22470]

Suggested Citation

  • Dajun Lin & Randall Lutter & Christopher Ruhm, 2016. "Cognitive Performance and Labour Market Outcomes," Working Papers id:11160, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:11160
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    Cited by:

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    2. Germinario, Giuseppe & Amin, Vikesh & Flores, Carlos A. & Flores-Lagunes, Alfonso, 2022. "What can we learn about the effect of mental health on labor market outcomes under weak assumptions? Evidence from the NLSY79," Labour Economics, Elsevier, vol. 79(C).
    3. Ksenia Rozhkova & Sergey Roshchin, 2021. "The Impact of Non-Cognitive Characteristics on the Higher Education Choice-Making: An Economist Perspective," Voprosy obrazovaniya / Educational Studies Moscow, National Research University Higher School of Economics, issue 3, pages 138-167.
    4. Mahdi Gholami & Samuel Muehlemann, 2024. "Mastering Math: A Gateway to Better Firms and Higher Earnings," Economics of Education Working Paper Series 0212, University of Zurich, Department of Business Administration (IBW), revised May 2024.
    5. Krishnakumar, Jaya & Nogales, Ricardo, 2020. "Education, skills and a good job: A multidimensional econometric analysis," World Development, Elsevier, vol. 128(C).
    6. Atkins, Rose & Turner, Alex James & Chandola, Tarani & Sutton, Matt, 2020. "Going beyond the mean in examining relationships of adolescent non-cognitive skills with health-related quality of life and biomarkers in later-life," Economics & Human Biology, Elsevier, vol. 39(C).
    7. Prakash, Kushneel & Awaworyi Churchill, Sefa & Smyth, Russell, 2022. "Are you puffing your Children's future away? Energy poverty and childhood exposure to passive smoking," Economic Modelling, Elsevier, vol. 114(C).
    8. Srivastava, Preety & Trinh, Trong-Anh, 2021. "The effect of parental smoking on children’s cognitive and non-cognitive skills," Economics & Human Biology, Elsevier, vol. 41(C).
    9. Nikolov, Plamen & Jimi, Nusrat & Chang, Jerray, 2020. "The Importance of Cognitive Domains and the Returns to Schooling in South Africa: Evidence from Two Labor Surveys," Labour Economics, Elsevier, vol. 65(C).
    10. Dennis Epple & Francisco Martinez-Mora & Richard Romano, 2021. "Charter School Practices and Student Selection: An Equilibrium Analysis," NBER Working Papers 29529, National Bureau of Economic Research, Inc.
    11. Gong, Xiaodong & Zhu, Rong, 2019. "Cognitive abilities, non-cognitive skills, and gambling behaviors," Journal of Economic Behavior & Organization, Elsevier, vol. 165(C), pages 51-69.
    12. Fraas, Arthur G. & Lutter, Randall & Murphy, Joshua & Xiahou, Qinrui & Potter, Jeff & Gosling, Samuel D., 2023. "Effects of Early Childhood Exposure to Ambient Lead and Particulate Matter on Adult Personality," RFF Working Paper Series 23-17, Resources for the Future.
    13. de Hoyos, Rafael & Estrada, Ricardo & Vargas, María José, 2021. "What do test scores really capture? Evidence from a large-scale student assessment in Mexico," World Development, Elsevier, vol. 146(C).
    14. Laura E. Henkhaus, 2022. "The lasting consequences of childhood sexual abuse on human capital and economic well‐being," Health Economics, John Wiley & Sons, Ltd., vol. 31(9), pages 1954-1972, September.
    15. Buchmueller, Gerda & Walker, Ian, 2020. "The Graduate Wage and Earnings Premia and the Role of Non-Cognitive Skills," IZA Discussion Papers 13248, Institute of Labor Economics (IZA).
    16. Jerry Hausman & Haoyang Liu & Ye Luo & Christopher Palmer, 2021. "Errors in the Dependent Variable of Quantile Regression Models," Econometrica, Econometric Society, vol. 89(2), pages 849-873, March.
    17. Davillas, Apostolos & de Oliveira, Victor Hugo & Jones, Andrew M., 2023. "Is inconsistent reporting of self-assessed health persistent and systematic? Evidence from the UKHLS," Economics & Human Biology, Elsevier, vol. 49(C).
    18. Nejad, Maryam Naghsh & Schurer, Stefanie, 2022. "Cognitive and non-cognitive abilities of immigrants: New perspectives on migrant quality from a selective immigration country," Journal of Economic Behavior & Organization, Elsevier, vol. 203(C), pages 107-124.
    19. Lisa Meehan & Gail Pacheco & Thomas Schober, 2023. "Basic Reading and Mathematics Skills and the Labour Market Outcomes of Young People: Evidence from PISA and Linked Administrative Data," The Economic Record, The Economic Society of Australia, vol. 99(327), pages 473-491, December.
    20. Vu, Tien Manh & Yamada, Hiroyuki, 2022. "Returns to test scores in Vietnam," MPRA Paper 111714, University Library of Munich, Germany.
    21. Mohitosh Kejriwal & Xiaoxiao Li & Linh Nguyen & Evan Totty, 2024. "The efficacy of ability proxies for estimating the returns to schooling: A factor model‐based evaluation," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 39(1), pages 3-21, January.
    22. Рожкова К. В. & Рощин С. Ю., 2021. "Влияние Некогнитивных Характеристик На Выбор Траекторий В Высшем Образовании: Взгляд Экономистов," Вопросы образования // Educational Studies Moscow, National Research University Higher School of Economics, issue 3, pages 138-167.
    23. Wiedner, Jonas & Schaeffer, Merlin, 2020. "Career trajectories into undereducation. Which skills and resources substitute formal education in the intergenerational transmission of advantage?," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 68, pages 1-1.
    24. Luthra, Renee Reichl & Platt, Lucinda, 2023. "Do immigrants benefit from selection? Migrant educational selectivity and its association with social networks, skills and health," LSE Research Online Documents on Economics 118629, London School of Economics and Political Science, LSE Library.
    25. Ashley Pullman & Britta Gauly & Clemens M. Lechner, 2021. "Short-term earnings mobility in the Canadian and German context: the role of cognitive skills," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 55(1), pages 1-19, December.

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    More about this item

    Keywords

    National Longitudinal Survey of Youth; Cognitive Performance ; Labour Market Outcomes; secondary schooling; Hispanics; non-Hispanic whites;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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