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Cognitive Performance and Labour Market Outcomes
Abstract
We use the U.S. National Longitudinal Survey of Youth 1979 and other sources to examine how cognitive performance near the end of secondary schooling relates to labour market outcomes through age fifty. Our preferred estimates control for individual and family backgrounds, non-cognitive attributes, and survey years. We find that returns to cognitive skills rise with age. Although estimated gains in lifetime incomes are close to those reported earlier, our preferred estimates make multiple offsetting improvements. Returns to cognitive skill are greater for blacks and Hispanics than for non-Hispanic whites, both in relative and absolute terms, with gains in work hours being more important than in hourly wages.
... The analysis also revealed intriguing insights into potential gender differences in labour market returns to CS and NCS. Although the evidence is mixed (four studies with inconclusive findings), a trend emerged in several studies have suggested that women might benefit more from NCS interventions (Lavado et al., 2022;Gladwell et al., 2022;Lin et al., 2018;Green et al., 2017). These interventions could focus on communication, interpersonal skills, and assertiveness, potentially helping women overcome potential gender bias in the workplace. ...
... Curriculums might not be designed to adequately assess and nurture NCS, and teachers might lack the resources or training to integrate these skills effectively into their teaching methods (Table 1). However, a promising approach emerged in skills development policies that incorporated workplace-based training (four articles) (Lavado et al., 2022;Gladwell et al., 2022;Lin et al., 2018;Green et al., 2017). These programs provide individuals with opportunities to learn practical skills directly relevant to their job and gain valuable work experience (Table 1). ...
... The analysis also pointed out intriguing hints about gender dynamics in the labour market. While the evidence is inconclusive, some studies suggest that NCS interventions may be particularly beneficial for women (Lavado et al., 2022;Gladwell et al., 2022;Lin et al., 2018;Green et al., 2017). This aligns with the findings of Ajayi et al. (2023), who suggested that socio-emotional skills can empower women in the workplace. ...
The persistent skills gap in Africa poses a significant barrier to both economic growth and individual career advancement. While cognitive skills (CS) are well-recognized for their crucial role in enhancing employability, non-cognitive skills (NCS) have received less attention, especially in African labour markets. This systematic review examines the combined impact of CS and NCS on labour market outcomes in Africa, offering recommendations for aligning educational systems with labour market demands. Following PRISMA 2020 guidelines, the review incorporates 52 peer-reviewed studies published between 2014 and 2024, identified through the Scopus database. The findings highlight that both CS and NCS are crucial for success in Africa’s labour market. While foundational cognitive skills, such as literacy and numeracy, remain essential, employers are placing growing importance on non-cognitive skills. NCS significantly enhance job performance, boost wages, and promote career advancement. Furthermore, targeted interventions in NCS development was found to be effective for women, reducing gender wage disparities. Additionally, a significant gap has emerged between the skills cultivated by educational systems and those sought by employers, highlighting the urgent need for reforms. This review offers a unique perspective on the combined effect of CS and NCS on labour market outcomes in Africa.
... However, these estimates may understate the association of cognitive ability with earnings in contemporary, representative U.S. samples. The WLS cohort excluded non-graduates and females and had very few nonwhite participants, i.e., groups that have higher returns to cognitive ability [88,92]. ...
... More recently, Lin, Lutter, and Ruhm used data for the NLSY79 cohort followed from age 20 to age 50 with the 2006 renormed AFQT scores and reported results of a regression model that included controls for family background and three behavioral attributes; a retrospective assessment of sociability at age six, and adult self-assessments of locus of control and self-esteem [92]. The results indicated that a 0.1 SD difference in cognitive ability (equivalent to 1.5 IQ points) was associated with earnings differences of 2.0% at age 30, 2.7% at age 40, and 3.3% at age 50 (equivalent to 1.3%, 1.8%, and 2.2% differences in earnings per one-point difference in ability, respectively). ...
... Updated estimates for the U.S. population in 2016 projected an NPV at birth of market productivity of USD 934,583 assuming 1% annual growth in future real earnings, and USD 758,954 assuming 0.5% annual growth productivity, both using a 3% discount rate [62]. [92]. This is comparable to an estimate using the NPV of future lifetime earnings in 2016 in combination with a conservative assumption of a 1.0% difference in earnings per IQ point. ...
Cognitive ability in childhood is positively associated with economic productivity in adulthood. Expected gains in economic output from interventions that protect cognitive function can be incorporated in benefit–cost and cost-effectiveness analyses conducted from a societal perspective. This review summarizes estimates from high-income countries of the association of general cognitive ability, standardized as intelligence quotient (IQ), with annual and lifetime earnings among adults. Estimates of the association of adult earnings with cognitive ability assessed in childhood or adolescence vary from 0.5% to 2.5% per IQ point. That range reflects differences in data sources and analytic methods. We take a conservative published estimate of a 1.4% difference in market productivity per IQ point in the United States from a recent study that controlled for confounding by family background and behavioral attributes. Using that estimate and the present value of lifetime earnings calculated using a 3% discount rate, the implied lifetime monetary valuation of an IQ point in the United States is USD 10,600–13,100. Despite uncertainty and the exclusion of non-market productivity, incorporation of such estimates could lead to a fuller assessment of the benefits of public health and clinical interventions that protect the developing brains of fetuses, infants, and young children.
... Altonji and Pierret (2001) argue that the returns to cognitive skills should rise as work experience grows, as employers are better able to judge the abilities of their employees over time. Indeed, using the National Longitudinal Survey of Youth, Lin et al. (2018) recently found that associations between general cognitive ability (IQ) and earnings increased over the span of participants' careers. However, these findings may not translate to more narrowly defined achievement skills, as other work has shown that intervention-spurred changes in mathematics skills may not lead to changes in general cognitive ability (Bailey et al., 2014;Watts et al., 2017). ...
... Second, most studies have not considered the independent contributions of mathematics and reading achievement to labor market success. Instead, studies examining achievement-to-earnings correlations have often used an aggregated measure of general cognitive ability (e.g., Heckman et al., 2006;Lin et al. 2018), or have ignored reading and language ability altogether (e.g., Currie & Thomas, 2001;Murnane et al., 2000). Such approaches make it difficult to project how programs that targeted only one academic domain might affect earnings (e.g., a mathematics or reading curriculum intervention) and leave questions regarding the differential 2 contribution of mathematics and reading skills to later economic attainment. ...
... When compared with previous studies reporting achievement-to-earnings correlations (e.g., Chetty et al., 2011;Currie & Thomas, 2001;Dougherty, 2003;Lin et al., 2018;Murnane et al., 2000;Neal & Johnson, 1996), the estimates reported here were often smaller. To ease comparisons, I present results in the appendix (see Supplementary Table A14) from several studies that estimated associations between math achievement and earnings. ...
The current article reexamines the correlation between achievement test scores and earnings by providing new evidence on the association between academic skills and measures of adult earnings assessed when participants were in their 30s, 40s, and 50s. Results suggest that math and reading scores are strong predictors of economic attainment throughout participants’ careers, but these associations may also be sensitive to controls for other characteristics—including measures of the early family environment, general cognitive functioning, and socioemotional skills. Although these associations demonstrate the likely importance of achievement skills in determining labor market productivity, the variability in the achievement-to-earnings correlation suggests that researchers should apply caution when using the correlation to project the long-run effects of educational interventions.
... How to convert these higher test scores into monetary benefits over the entire life course is one of the crucial steps in our cost-benefit analysis. Several studies, almost all based on U.S. data, have estimated the relation between test scores measured in childhood and adolescence and adult earnings ( Carneiro, Crawford, & Goodman, 2007;Chetty, Friedman, & Rockoff, 2014;Lin, Lutter, & Ruhm, 2016;Mulligan, 1999;Murnane, Willett, Duhaldeborde, & Tyler, 2000). As this type of longitudinal evidence is not available for Spain, we rely on evidence from the United States. ...
... Moreover, the estimated returns to skills depend on the age at which the earnings are measured (most studies focus on early career earnings). As evidence indicates that returns to skills increase over the life cycle ( Hanushek, Schwerdt, Wiederhold, & Woessmann, 2015;Lin et al., 2016), the results based on early career earnings may therefore substantially underestimate the relevance of skills for lifetime earnings (e.g., B€ ohlmark & Lindquist, 2006;Haider & Solon, 2006). These issues are important in our cost-benefit analysis as (changes in) lifetime earnings determine the preschool benefits. ...
... In our main analysis, we base our parameter on recent estimates from the National Longitudinal Survey of Youth 1979 (NLSY79). Lin et al. (2016) show for the United States that the Armed Forces Qualification Test (AFQT) score (a composite cognitive test score) measured between ages 16 and 23 predicts earnings several decades later, with stronger effects on earnings later in life. Conditional on background characteristics and noncognitive skills, a 1 SD increase in cognitive skills increases annual labor earnings by 17% (by age 28), 24% (by age 38), and 26% (by age 48). ...
This study provides a cost–benefit analysis of expanding access to universal preschool education, focusing on a Spanish reform that lowered the age of eligibility for publicly provided universal preschool from age 4 to age 3. Benefits in terms of child development and maternal employment are estimated using evidence on the causal effects of this reform. In the baseline estimation the benefit–cost ratio is over 4, indicating sizeable net societal benefits of the preschool investment. The results show that the child development effects are the major determinant of the cost–benefit ratio; the employment gains for parents appear to play a relatively minor role. Overall, the cost–benefit analysis provides support for investing in high-quality preschool education.
... A continuidade do processo de escolarização de jovens e adultos normalmente é motivada pela esperança de melhores oportunidades de emprego, proporcionadas pela aquisição de anos de estudo (Neri, 2010;Lopes;Burgardt, 2013;Gomes, 2015). No entanto, a quantidade de escolaridade em si não garante, necessariamente, ascensão na carreira profissional, pois as habilidades cognitivas adquiridas ao longo do processo educativo também desempenham papel fundamental na produtividade e resultados do mercado de trabalho (Hanushek;Woessmann, 2009;Lin et al., 2018;Glewwe et al., 2022). ...
... Apesar de a EJA desempenhar um papel fundamental para a formação e alfabetização de jovens e adultos, o seu objetivo final não deve se restringir apenas à finalização das etapas de ensino e elevação dos anos de escolaridade, pois as habilidades cognitivas desenvolvidas em sala de aula também impactam nos resultados do mercado de trabalho (Hanushek, Woessmann, 2009;Lin et al., 2018;Glewwe et al., 2022). Além disso, as diferenças de aprendizado desfavoráveis aos estudantes da EJA podem reduzir a competitividade destes no ENEM e, assim, limitar suas oportunidades de acesso ao ensino superior. ...
Esta pesquisa analisa os diferenciais de desempenho acadêmico entre os estudantes da Educação de Jovens e Adultos (EJA) e do ensino regular no Exame Nacional do Ensino Médio (ENEM) no Brasil. Para isolar os efeitos da EJA de outros fatores que possam afetar os resultados acadêmicos dos estudantes, recorreu-se ao algoritmo Coarsened Exact Matching (CEM) combinado com o método de Pareamento por Escore de Propensão, aplicado aos microdados do ENEM e do Censo Escolar de 2018. Os resultados evidenciam a superioridade do sistema regular de ensino na produção de conhecimento comparativamente ao ensino EJA, mostrando-se mais eficiente em potencializar habilidades cognitivas importantes para a qualificação profissional e continuidade do investimento em capital humano.
... We are grateful to the National Centre for Vocational Education Research (NCVER) and the Australian Data Archives for making these data available and to DET for their support and comments on earlier drafts. The findings and views reported in this paper are those of the authors and should not be attributed to DET, NCVER or Lin et al. (2016) estimated lifetime differences in earnings associated with numeracy and literacy levels in the United States measured at ages 16 to 23, a time when post-secondary education and initial employment may influence proficiency. As such, results from the Lin et al. (2016) study do not give a clear picture of post-school trajectories of students with low reading proficiency while in school. ...
... The findings and views reported in this paper are those of the authors and should not be attributed to DET, NCVER or Lin et al. (2016) estimated lifetime differences in earnings associated with numeracy and literacy levels in the United States measured at ages 16 to 23, a time when post-secondary education and initial employment may influence proficiency. As such, results from the Lin et al. (2016) study do not give a clear picture of post-school trajectories of students with low reading proficiency while in school. ...
While illiterate adults are disadvantaged in the labour market, it is unclear whether low reading proficiency in school diminishes employment prospects in adulthood. We fill this gap using data on participants in the 2003 Program of International Student Assessment who were tracked to age 25 in the Longitudinal Survey of Australian Youth. We find no difference in full-time employment rates or earning capacity of jobs attained at age 25 associated with low reading proficiency at 15. Those with low reading proficiency are found to avoid negative effects through high rates of participation and positive outcomes from vocational education and training.
... Childhood is an important time for developing cognitive abilities and for establishing the foundations for future well-being (Lin et al., 2018). Parents' education, family background and how children spend their time are crucial for children's development and human capital formation (Cobb-Clark et al., 2019, Cornelissen andDang, 2022). ...
Parents’ education and the time they spend with their children are crucial for child development and human capital formation. We examine the returns of parental education on children’s cognitive devel- opment and academic performance, and how these effects vary by ethnicity. Using longitudinal data, random e↵ects models and Augmented Value Added models, we identify persistent test score gaps by ethnicity and by parental education which feed into later education and labor market outcomes. The gaps remain after controlling for socio-demographic characteristics and ability. Asian children outperform due to larger time investments, selection into better schools and parenting styles. Indigenous children tend to underperform due to a complex interplay of lower financial resources, lower time investments and parenting styles. On average, parental education facilitates the intergenerational transmission of human capital across ethnic groups in similar ways. However, quintile regressions identify diminished returns to parental education for Indigenous children at the upper end of the test score distribution. Our results have policy implications with respect to structural barriers and equity in the education system.
JEL classifications: I24, I26, J15, J18
... Cognitive skills not only affect insurance decisions, but also have important implications for labor market behaviors (12,32), such as labor supply. In this paper, I further investigate whether and how do cognitive skills affect labor supply behavior in rural China. ...
Introduction
How cognitive abilities affect financial and economic decision is an important issue that has attracted the attention of economics.
Method
This paper uses the China Family Panel Studies (CFPS) 2010, 2014, and 2018 survey data to empirically test the impact of cognitive skills on the insurance participation decisions in rural China.
Results and discussion
The results show that higher word ability is correlated to higher social health insurance participation and both word and math ability leads to higher social pension participation. Mechanism analysis reveals that individuals with higher cognitive skills are more likely to be affected by peers in insurance decision, and higher cognitive skills increase personal income that enables them to enroll in the social insurance. Further investigation of labor supply behavior suggests that while cognitive skills positively affect non-agricultural labor participation, cognitive skills amplify the negative effect of social security on labor supply.
... Furthermore, the MoEYS has faced challenges to encourage students from provinces and underrepresented groups to apply for scholarships, contributing to the inequity (World Bank, 2017). Consequently, this results in heightening the probability of students, particularly those with socio-economically disadvantaged background, forsaking their academic endeavors because the shared expense of high-priced higher education is an enormous cost that can jeopardize economically disadvantaged students' future by negatively affecting their wage potential and employment prospects due to reduced productivity (Heckman et al., 2006;Lin et al., 2018). ...
Attempts to expand the availability of higher education frequently come with exor-bitant expenses, heightening the gap between privileged and underprivileged students. Distributing scholarships to the higher education sub-sector is commonly seen as a viable means of promoting educational success, expanding accessibility , and addressing equity issues in higher education. Nevertheless, the problem of equity remains a long-lasting and unfair obstacle in Cambodia's higher education sub-sector, despite the presence of a national scholarship policy. This is based on the straightforward fact that there is no fundamental metric to evaluate the inclusion and equity of scholarship distribution. Moreover, the scholarship selection procedures may be inefficient, contrary to what policy documents indicate, resulting in students from lower-income households being left behind in the opportunities they were promised. Therefore, this study is the first ever attempt to profile Cambodian higher education scholarships from a socioeconomic viewpoint that discusses how family background impacts the likelihood of students from low-income households access-ing social investments, such as scholarships. All analyses point out that opportunities are heavily skewed toward students with better-off background, and therefore incorporating this understanding will help Cambodian universities better allocate scholarships to boost the country's human capital and improve university representation from lower economically-secure communities.
... Questionnaires place cognitive demands to respondents and, thus, it is likely that respondent's cognitive ability will affect the consistency of responses. Moreover, as cognitive ability is associated with a number of labour market outcomes (Lin et al., 2018), establishing the presence of systematic error in SAH that is relevant to cognitive ability may be of particular relevance to research exploring the effect of self-reported health measures on labour market outcomes. Recent evidence using Australian data shows that the probability of consistent SAH responses increases with the quantiles of the cognitive ability index that accounts for memory, cognitive function, and verbal skills (see Black, Johnston, Shields, Suziedelyte, 2017). ...
In this paper, we investigate whether individuals provide consistent responses to self-assessed health (SAH) questions in the UK Household Longitudinal Study (UKHLS), and the potential implications for empirical research in case of inconsistent reporting behaviour. We capitalise on an opportunity in the UKHLS, asking respondents the same SAH question twice: with a self-completion and an open interview mode, within the same household interview over four waves. We estimate multivariate models to explore which individual characteristics are systematically relevant for the likelihood and frequency of inconsistent reporting. About 11-24% of those reported a particular SAH category in the self-completion reported inconsistently in the open interview. The probability of inconsistency is systematically associated with individual's demographics, education, income, employment status, cognitive and non-cognitive skills. The same characteristics also predict the frequency of inconsistent reporting across four UKHLS waves. Analysis of the implications of reporting inconsistencies shows no impact of SAH measurement on the association between income and health. A set of dimensions of people's physiological and biological health, captured using biomarkers, is associated equally with both SAH measures, suggesting that the interview mode does not play a role in the relationship between SAH and more objective health measures.
... Fair and rational feedback may stimulate employee performance, and the process will lead to behavioral change if the employee willingly accepts the performance appraisal feedback. In suggesting the key feedback and labor market variables, we follow others (Levitt et al. (2016);Lin et al. (2018)); namely, we select (see also Table 3): (X 7 ) Qualification: "My qualification suits my job". (X 8 ) Appraisal: "I get praise for doing a good job". ...
Our paper examines the impact of training outputs and employment factors on several facets of employee performance while supporting managerial decision-making in the banking sector. First, we introduce four performance measures in individual productivity assessment. Second, three identified groups of covariates are associated with these measures, namely, the training method success, delivery of knowledge, and labor market performance feedback. Based on our empirical results from Germany, we suggest that response-related decisions are accompanying bank employees’ profiles and appraisal. In particular, we form decision-making functions and finally show that the banking industry successfully balances between internal and external factors in optimizing employees’ performance.
... In the LMIC study, the cognitive score increases by one standard deviation, salary Would increase by 4.5%. Ozawa and others also pointed out that improving cognition is the key to improving economic returns, especially in low-income countries [11]. Lin et al. pointed out that a high level of cognitive ability can also increase the expected average lifetime income [12]. ...
This article uses the 2018 Chinese Family Tracking Survey data to empirically analyze the impact of mental health on family income and explore the mediating role of cognitive ability. The results show that for every 1% reduction in the family's mental unhealthy degree measured by the CES-D8 score, the family income level will increase by 1.7%-1.9%. After adding the pre-determined explanatory variable 2016 mental state level and other operations, use the filtered loneliness As an instrumental variable, the same conclusion was obtained by performing 2-stage least squares; the results of indirect calculation show that the mediating effect of cognitive ability is about 16.96% of the total effect of mental health affecting family income level; in terms of heterogeneity analysis, Researched that the impact of mental health problems at different family income levels is different. The marginal effect of the mental health impact of low-income families is as high as -2.9%. The mental health status of the family finance chief has a significant impact on the income of the entire family , Especially low-income families.
... There is ample evidence that child cognitive ability is an important predictor of labour market outcomes, including earnings, occupation, work experience and youth unemployment [321][322][323][324][325] . ...
This chapter is about the experiences of disadvantaged children in the north during the pandemic lockdown, and how it has impacted on their education.
... There is ample evidence that child cognitive ability is an important predictor of labour market outcomes, including earnings, occupation, work experience and youth unemployment [321][322][323][324][325] . ...
... The evolution of the returns to human capital in Canada, 1980-2005 (1) 5. Il n'est pas étonnant que le taux de diplomation soit plus élevé pour HEC, sachant que cette université offre en grande partie des programmes d'études d'une durée de trois ans. (Murnane et al., 2000 ;Rose et Betts, 2004 ;Lin et al., 2018 ;Wolcott, 2018). En revanche, les analyses portant sur des données canadiennes sont plus rares et moins récentes (Charette et Meng, 1998 ;Green et Riddell, 2001 ;Finnie et Meng, 2006). ...
... This in turn implies that a household with ability onetenth of a standard deviation above the median will have earnings 3.5% higher than a household at the median. This corresponds closely to the 3.3% estimate of the gain in annual income at age 50 from a one-tenth standard deviation increase in cognitive ability in Table 3 of Lin, Lutter, and Ruhm (2018). Table 7.8 columns (1) and (2) provide regressions of achievement on IQ and achievement on non-cognitive skills respectively. ...
... Poor educational attainment and cognitive functioning can be linked to outcomes such as fewer labour market opportunities, lower wages, and ultimately income poverty (Awaworyi Churchill & Mishra, 2018;Barrett, 2012;Kingdon & Unni, 2001;Lin et al., 2018), which is associated with energy poverty (Okushima, 2016). Poorer educated individuals may also be less likely to switch to another supplier or negotiate with their own supplier; hence, paying higher energy prices. ...
When parents engage in behaviours that are detrimental to their health, this frequently not only directly affects the parents, but has spillover effects to their children. There is growing recognition that these spillover effects can be persistent. We examine the long-term effects of the health behaviours of parents on outcomes in adulthood of their children, focusing on exposure to parental smoking. As we discuss in detail in Section 2, children have immature respiratory and immune systems that make them particularly susceptible to passive smoking. Exposure to passive smoking in childhood can cause asthma and chronic respiratory problems in the short-term, which persist and accumulate in the longer-term, leading to serious health risks, associated with a decline in vital organs and mental functioning. There is also evidence that exposure to smoking makes it more difficult to concentrate in school, reducing the accumulation of human capital. The combined education and health consequences of exposure to smoking are likely to be cumulative and lead to poorer outcomes later in life.
... For instance,Altonji and Pierret (2001),Cunha et al. (2011), andLin et al. (2018) find that returns to cognitive skills increase with age. ...
... Although prior research demonstrates that earnings differentials relate to education (e.g., Connolly and Gottschalk 2006) and cognitive skills (e.g., Hanushek et al. 2015), as well as skill-based activities at work (e.g., Liu and Grusky 2013), the majority of this research relies on cross-sectional data and does not generate insight into how all three aspects relate to earnings mobility. While it is unknown if all three aspects of human capital facilitate access to higher earnings through mobility, prior research indicates that the earnings returns to cognitive skills increase with age (Lin et al. 2018) or time spend in a job, for example, when employers learn more about the skills of their workers (Altonji and Pierret 2001). Education level is also associated with career progression, often through occupational sorting (Manzoni et al. 2014) and job mobility (Becker and Blossfeld 2017). ...
It is well-established that human capital contributes to unequal levels of earnings mobility. Individuals with higher levels of human capital, typically measured through education, earn more on average and are privy to greater levels of upward change over time. Nevertheless, other factors may have an incremental effect over education, namely cognitive ability and the skill demands of employment. To deepen insight into whether these aspects contribute to earnings mobility over a four-year period, the present study examines positional change in Canada and Germany—two contexts typified as examples of liberal and coordinated market economies. A series of descriptive indices and relative change models assess how different measures of human capital are associated with earnings mobility. The results indicate that, while individuals with higher cognitive skills experience greater earnings stability and upward mobility in both countries, there is only an incremental effect of skills on mobility in Germany once we account for educational credentials. The results also provide evidence on the role of skill demands for earnings mobility; in both countries, advanced skills at work are associated with greater short-term mobility, even while controlling for cognitive ability and other factors. Together the results showcase how longitudinal data containing detailed measures of human capital allow for deeper insight into what facilitates earnings mobility.
... While the link of cognitive skills (i.e. intellectual and reasoning abilities) with social and economic success is well established in the literature (Zax and Rees, 2002;Blau and Kahn, 2005;Lin et al., 2018), more recently the role of non-cognitive skills (i.e. adaptive personality traits, and social and emotional skills) in determining educational performance, occupational attainment and earnings has also attracted a lot of attention from social scientists (Kuhn and Weinberger, 2005;Heckman et al., 2006;Lindqvist and Vestman, 2011). ...
Economic research emphasises the importance of cognitive and non-cognitive skills in children for long-term labour market, health and social outcomes. In contrast to previous studies that focus on the effects of maternal smoking during pregnancy, we contribute to the literature by examining whether parental current smoking impacts on children’s cognitive and non-cognitive development. We exploit data from the Longitudinal Study of Australian Children and address potential endogeneity and self-selectivity bias using robust estimation methods. Overall, we find evidence that parental smoking results in worse development outcomes in children. Specifically, our fixed-effects estimates indicate that children living with parents who are smokers exhibit lower cognitive outcomes ranging between 0.09 and 0.17 standard deviation, while the impacts on non-cognitive outcomes range between 0.06 and 0.80 standard deviation. We also provide insights on some of the mechanisms of transmission. Our findings suggest that campaigns, programs and policies that reduce tobacco consumption may have positive externalities in terms of improving children’s cognitive and non-cognitive development, and long-term labour market outcomes.
... Of these three capabilities, the role of non-cognitive skills in determining later-life outcomes has been the least explored. Child health and cognition have long been recognised as important predictors of outcomes, such as test scores (Broman et al., 1975;Edwards and Grossman, 1979;Shakotko et al., 1981;Berkowitz and Stern, 2018), educational attainment (Wolfe, 1985;Rohde and Thompson, 2007;Grossman, 2010), labour market outcomes (Contoyannis and Dooley, 2010;Lin et al., 2016) and health (DeFries et al., 2009;Wang et al., 2018). ...
Several studies have established associations between early-life non-cognitive skills and later-life health and health behaviours. However, no study addresses the more important policy concern about how this relationship varies along the health distribution. We use unconditional quantile regression to analyse the effects of adolescent non-cognitive skills across the distributions of the health-related quality of life at age 50 and biomarkers at age 45 years. We examine the effects of measures of conscientiousness, agreeableness and neuroticism recorded at age 16 for 3585 individuals from the National Child Development Study. Adolescent conscientiousness is positively associated with ability to cope with stress and negatively associated with risk of cardiovascular disease in middle-age. Adolescent agreeableness is associated with higher health-related quality of life and lower physiological ‘wear and tear’, but negatively associated with ability to cope with stress in middle-age. Adolescent neuroticism is associated with lower health-related quality of life, higher physiological ‘wear and tear’, and a higher risk of cardiovascular disease in middle-age. All of these associations are stronger at the lower end of the health distribution except for the cardiovascular risk biomarkers. These associations are robust to correcting for attrition using inverse probability weighting and consistent with causal bounds assuming proportional selection on observables and unobservables. They suggest policies that improve non-cognitive skills in adolescence could offer most long-term health benefit to those with the poorest health.
... An obvious first candidate of what could qualify the undereducated is therefore general cognitive ability, as often measured by IQ tests. Cognitive ability is highly predictive of labor market outcomes (Heckman et al., 2006;D. Lin et al., 2018) because it directly increases productivity, but also allows workers to understand complex job tasks, increase their skills with work experience, and benefit from further education. From an employers' perspective, formal certification may simply be not as important if workers are able to demonstrate cognitive ability. In line with these ...
A significant share of employees in Europe has less formal training than is required by their job; they are undereducated. We use harmonized panel data from the United Kingdom and Germany to investigate the skills and resources allowing the undereducated to develop careers in occupations supposedly beyond their reach. Our theoretical approach complements individual-centered labor market theory with an intergenerational mobility perspective which regards undereducation as a form of family status maintenance. Our empirical results show that persons whose (non-)cognitive skills exceed their formal education are more likely to be undereducated in the cross-section, and to enter undereducated employment or be promoted into it throughout the life course. Yet beyond individual merit, parental socio-economic status is a similarly-important predictor of these outcomes; our analyses even trace a significant share of the importance of (non-)cognitive skills to it. To complete our intergenerational argument, we finally demonstrate that undereducation acts as a pathway to the intergenerational reproduction of earnings inequality – more so, in fact, than the avoidance of overeducation. These results are remarkably similar across the UK and Germany, although some country differences suggest higher skill-induced career mobility in Britain and stronger origin effects in Germany. We discuss promising avenues for further comparative research in the conclusion.
... It has inspired a vast amount of applications using different outcome variables as the evaluative space of labor market outcomes (see e.g. Lin, Lutter, & Ruhm (2018) for the US, Lindqvist & Vestman (2011) for Sweden and Brunello & Schlotter (2011) for a set of European countries). In this paper, we propose to use as the outcome of interest a latent work-related wellbeing variable that encompasses multiple aspects of a good job. ...
Education, skills and labor market outcomes are tightly linked. Most empirical evidence about their interconnections is obtained using rich longitudinal datasets coming from developed countries, and often treat earnings as the sole outcome of interest. Much less is known about the same in developing countries due to lack of appropriate data. This paper is an attempt to fill this gap by operationalizing the technology of skill formation framework using a static dataset with some information on past variables. Following the theoretical underpinnings of modern development paradigms, we define our variable of interest to be a multidimensional concept of work-related well-being, going beyond wages to include employment opportunities, decent working time and safe work environment. We thus apply a suitably adapted version of the above framework, resulting in a simultaneous equation model with latent variables, to Bolivian data. We find that an above-average well-being in terms of employment opportunities and earnings is only observed in the top-most quintile of the skills distributions, whereas the top three quintiles are relatively well-off in the safe work dimension. Overwork is responsive to cognitive skills but not to non-cognitive skills, and it is highly prevalent across the entire distribution of the former. These two types of skills are also differently influenced by education. An individual with a primary schooling is already in the above-average group in terms of non-cognitive skills, a condition requiring an undergraduate college degree in the case of cognitive skills. From a policy perspective, we note that, contrary to the general findings in a developed country context, the premium for cognitive skills on the labor market is higher than that for non-cognitive skills. This can be explained by the relative scarcity of the former, which is mostly acquired through formal education, a situation often encountered in many developing countries.
... For example, in the early studies on human capital, cognitive-ability models were viewed a rival for human capital models in explaining earnings, ignoring non-cognitive traits entirely ( Becker, 1964;Cunha et al., 2006;Griliches, 1977 ). Recent empirical studies show that cognition has a positive relationship with labor market outcomes Lin et al., 2018;Lindqvist and Vestman, 2011 ). There is growing evidence that it is also related to behavioral anomalies such as impatience and anomalous preferences ( Benjamin et al., 2013;Dohmen et al., 2010 ). ...
This paper examines the effects of cognitive abilities and non-cognitive skills on gambling behaviors in Australia. We use the scores for three cognitive functioning tasks as measures of cognitive abilities. Locus of control and the Big Five personality traits are used as measures of non-cognitive skills. We find that cognitive abilities affect both gambling participation and problem gambling. While locus of control does not affect people's participation in gambling, gambling participants with strong internal locus of control are less likely to become a problem gambler than those with external locus of control. We also show that personality traits are important factors for both gambling participation and problem gambling. There is also evidence that both cognitive and non-cognitive skills affect gamblers' choice between skill-and-chance gambling and pure-chance gambling. Our findings seem to support the view that market imperfection could at least explain some individuals' participation in gambling.
... The authors also adduced evidence that the effect of math skills on wages was partially mediated through Educational Attainment. A similar, but more extensive, study was conducted by Lin et al. (2016). Holzer and Lerman (2015) used PIAAC data for the United States to examine the relationships between Cognitive Skills (literacy, numeracy, problem solving in technology-rich environments [PS-TRE]) and labor market outcomes. ...
Background
Ongoing interest in the relationships between family background and adult outcomes is motivated by concerns regarding the intergenerational transmission of advantage/disadvantage. Currently all countries are far from achieving the ideal that all individuals, irrespective of their starting points or their demographic characteristics, are able to accumulate sufficient human capital so that they can achieve success in the workplace and fulfill their responsibilities as family members and as citizens. This study quantifies the length of the shadow cast by family background and personal characteristics on an individual’s prospects in the labor market. It also examines the extent to which these relationships are mediated by factors more proximal to labor market entry. Methods
This study uses data for 21 OECD countries from the first round of PIAAC. It employs descriptive statistics, correlations and logistic regression. Two dichotomous variables are derived from each country’s national annual income distribution: Q1 = 1 if the individual’s income is in the first (lower) quartile and Q4 = 1 if the individual works full-time and whose income is in the fourth (upper) quartile. For each country, a nested sequence of logistic regression models are fit to ascertain the role of more proximal factors in mediating the impact of family background and demographic characteristics on these labor market outcomes. ResultsThe patterns of relationships are qualitatively similar across the 21 countries, although the estimated associations vary greatly in strength. Parental education accounts for substantial proportions of the variation in respondents’ Educational Attainment and Cognitive Skills. In most countries, children born to parents with lower levels of education have less than a fifty–fifty chance of exceeding that level. Family background is strongly associated with income, but the relationship is largely mediated by Educational Attainment and Cognitive Skills. Females and younger individuals have much higher odds of being in the lower quartile and much lower odds of reaching the upper quartile, even after adjusting for other variables. The magnitudes of these adjusted odds are concerning. Conclusions
Family background and gender cast a long shadow on individuals’ life prospects. Countries vary greatly in their success in mitigating these disadvantages. Formulating effective policies will depend on understanding a complex set of dynamics that surely differ among countries.
Several chemical’s families are linked to a loss of intellectual quotient (IQ) points in children. This may lead to reduced working productivity and/or lower wages in adulthood and contribute to increasing the substantial socio-economic burden worldwide. The Adverse Outcome Pathway (AOP) concept, that leverages existing data to formalize knowledge, is a well-accepted concept in risk assessment although it does not handle the socio-economic impact that environment-induced diseases may generate. Here, we propose to extend the AOP framework by bridging an adverse outcome (AO) to a cost outcome (CO) creating so-called Cost Outcome Pathways (COPs) for including the socio-economic costs of exposure to chemicals. As a case study, a COP related to neurodevelopmental toxicity was designed, with a connection between the AO ‘decreased, IQ’ and the CO ‘increased, socio-economic burden’. For support to policymaking in the public health sector, this framework might also hold great potential for environmental exposure-related diseases such as cancer or obesity which are diseases with known detrimental socio-economic impacts.
Purpose
In most Sub-Saharan African countries, a widely adopted policy to increase access to healthcare is the complete or partial removal of health user fees. This paper examines the effect of removing health user fees on the cognitive development of children in Ghana.
Design/methodology/approach
The study uses the Ghana Socioeconomic Panel Survey (GSPS) and a difference-in-differences method to analyze the impacts of free healthcare.
Findings
The findings show that improved access to healthcare enhances the cognitive ability of children. More importantly, children who received free healthcare in early life experienced significant improvement in their cognitive ability. The benefits are also huge for girls and children from low-income families. The findings further show that maternal health, the timely receipt of vaccinations and regular infant health visits are important operative channels through which improved access to healthcare affects children’s cognitive ability.
Originality/value
There are several studies on the effects of eliminating health user fees on various outcomes, but only a few focus on children’s outcomes. This study contributes to the literature by focusing on a vital child outcome, cognitive ability and exploring the timing and pathways through which abolishing health user fees affect cognitive development in children. Because cognitive ability is crucial for educational and labor market outcomes, the findings are useful for policymakers in determining the population to target and the timing of interventions that yield huge impacts when designing health intervention programs in developing countries.
Peer review
The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-11-2022-0739 .
This study investigated the relationship between sleep habits in early childhood and academic performance and non-cognitive skills in the first grade. We retrospectively analyzed a longitudinal population-based cohort from birth through early childhood, up to elementary school, in Amagasaki City, Japan. The primary outcome was academic performance in the first grade. Other outcomes were self-reported non-cognitive skills. Overall, 4395 children were enrolled. Mean national language scores for children with bedtimes at 18:00–20:00, 21:00, 22:00, and ≥ 23:00 were 71.2 ± 19.7, 69.3 ± 19.4, 68.3 ± 20.1, and 62.5 ± 21.3, respectively. Multiple regression analysis identified bedtime at 3 years as a significant factor associated with academic performance. However, sleep duration was not significantly associated with academic performance. Bedtime at 3 years also affected non-cognitive skills in the first grade. Diligence decreased with a later bedtime (21:00 vs. 18:00–20:00; odds ratio [OR]: 1.98, 95% confidence interval [CI] 1.27–3.09; 22:00 vs. 18:00–20:00; OR: 2.15, 95% CI 1.37–3.38; ≥ 23:00 vs. 18:00–20:00; OR: 2.33, 95% CI 1.29–4.20). Thus, early bedtime at 3 years may be associated with a higher academic performance and better non-cognitive skills in the first grade. Optimum early-childhood sleep habits may positively impact academic future.
A common approach to addressing ability bias is to augment the earnings-schooling regression with proxies for cognitive and non-cognitive skills. We evaluate this approach using a factor model framework, which allows consistent estimation of the returns to schooling without relying on proxies. The factor model estimators may be viewed as implicitly estimating proxy measurement error and/or accounting for omitted dimensions of ability. A bias decomposition quantifies the contribution of the proxies while the estimated latent skills are used to construct direct tests for their viability. Both sets of results confirm the inadequacy of the proxies in capturing the latent skills.
We study the effect of the COVID-19 pandemic during the first semester of 2020 on the labor market outcomes of elderly workers, using data from the Survey of Health, Ageing and Retirement in Europe. We measure the gender gap in the conditional mean of the probability of experiencing a job interruption, of changing the number of hours worked, and of working from home. We control for a rich set of observable characteristics, including several measures of cognitive and non-cognitive ability. We apply decomposition methods to distinguish, on the one hand, the part of the gap that is due to gender differences in the endowments of the determinants of the outcome in question and, on the other, to gender differences in the effects of these determinants. We find that there is no gender gap in the probability of experiencing a job interruption nor in the probability of working fewer hours than before the pandemic. In contrast, there were significant differences in the probability of increasing the amount of worked hours or working remotely, which were larger for females in both cases. For the latter variable, the difference is largely attributable to different endowments between men and women. However, the gap in the probability of working longer hours is mostly attributable to the coefficients component.
The purpose of this study is to investigate the impact of child labor on cognitive abilities test and social skills. The study uses school-based survey data from 3533 Palestinian children in West Bank schools who are in primary grades (5th-9th) collected with the assistance of the Palestinian Ministry of Education. The research employs a multiple regression model after controlling several demographic variables on an individual level. The results demonstrate that child labor is significantly associated with a decrease in a child's cognitive test score in the following period (12 months). The findings varied among children according to their gender, age, and parental academic background. Child labor has a greater impact on female students, children in the lower age category (10–12 years compared to 13–16 years) and children with less educated parents. Further, the study pointed out to the correlation between child labor and increasing child’s emotional, peer relations and conducts problems assessed by Strengths and Difficulties Questionnaire (SDQ).
This paper uses Programme for International Student Assessment (PISA) data linked to administrative data to track the educational and labour market outcomes of young people. Students with lower skills have lower rates of participation in further education. While low‐skilled men out‐earn their higher‐skilled counterparts when they are very young, their earnings are overtaken by those with higher skills when they are in their early 20s, and they earn around 15 per cent less by the age of 25. The differences among women are substantially larger – women with low skills earn approximately 35 per cent less than their higher‐skilled counterparts by age 25.
Recent scholarship suggests that immigrant selectivity - the degree to which immigrants differ from non-migrants in their sending countries - can help us understand their labour market outcomes in the receiving country. The selectivity hypothesis rests on three assumptions: first, that immigrants differ from non-migrants in their observed characteristics, such as education; second, that there is an association between such observed selection and (usually) unobserved characteristics, and third that this association drives positive relationships between observed selection and immigrant outcomes. While there is some evidence for a relationship between the degree of immigrants' selectivity and their children's outcomes, a comprehensive assessment of these assumptions for immigrants' own labour market outcomes remains lacking. We use high-quality, nationally representative data for the UK, with large numbers of immigrants from a wide range of different origins and with a rich set of measures of networks, traits and characteristics, as well as economic outcomes, not typically found in surveys of immigrants. This enables us to conduct a comprehensive assessment of the selectivity hypothesis and its assumptions. We find that immigrants to the UK are on average positively selected on educational attainment. However, counter to theoretical assumptions, educational selection has little association with labour market outcomes: it is not or negatively associated with employment; and it is only associated with pay for those with tertiary qualifications and with occupational position for women. We show that the general lack of economic benefits from selection is consistent with an absence of association between educational selectivity and (typically unobserved) mechanisms assumed to link selection and labour market outcomes: social networks, cognitive and non-cognitive skills, and mental and physical health. We contextualise our findings with heterogeneity analysis by migration regime, sending country characteristics, level of absolute education and location of credential.
We employ a nonparametric partial identification approach to bound the causal effect of poor mental health on employment and earnings using the National Longitudinal Study of Youth 1979. Our approach allows us to provide bounds on the population average treatment effect based on relatively weak, credible assumptions. We find that being categorized as depressed decreases employment by 10% and earnings by 27% at most, but we cannot statistically rule out a zero effect. We also provide insights into the heterogeneity of the effects on labor market outcomes at different levels of adverse mental health experienced (no, little, mild, moderate, and severe depressive symptoms). We find that going from having no (little) to severe depressive symptoms reduces employment by 3-18% (3-16%) and earnings by 11-44% (12-36%). The estimated bounds statistically rule out null effects for earnings but not for employment.
We study innate ability – a traditionally unobserved component of migrant quality – in Australia, one of the top six destination countries worldwide. We proxy innate ability with validated and widely used measures of non-cognitive (personality) and cognitive (task performance) skills. We find that both first- and second-generation immigrants consistently outperform Australian-born residents with no immediate migration background (natives) on socially beneficial personality traits (Conscientiousness, Openness to Experience) and cognitive ability measures associated with high levels of executive function (coding speed), independent of their gender. The migrant pool resulting from the phase in of a selective immigration policy since 1974 was significantly better educated and more diversified in terms of language background relative to earlier arrivals. Although this meant that the point system attracted migrants with poorer English-language skills relative to natives with equal educational attainment, it did not change their innate ability composition or labor market outcomes. We conclude that selecting migrants based on observable quality characteristics did not lead to a migrant pool of lower quality in traditionally unobservable characteristics in the Australian immigration context.
Childhood sexual abuse is a prevalent problem, yet understanding of later‐in‐life outcomes is limited due to unobservable determinants. I examine impacts on human capital and economic well‐being by estimating likely ranges around causal effects, using a nationally representative U.S. sample. Findings suggest that childhood sexual abuse leads to lower educational attainment and worse labor market outcomes. Results are robust to partial identification methods applying varying assumptions about unobservable confounding, using information on confounding from observables including other types of child abuse. I show that associations between childhood sexual abuse and education outcomes and earnings are at least as large for males as for females. Childhood sexual abuse by someone other than a caregiver is as influential or more so than caregiver sexual abuse in predicting worse outcomes. Considering the societal burden of childhood sexual abuse, findings could inform policy and resource allocation decisions for development and implementation of best practices for prevention and support.
The article presents a review of literature systematizing findings on the contribution of non-cognitive skills to higher education choice-making. The concept of higher education choice-making in this paper embraces the decision to embark on a college degree, the probability of successful degree completion, the choice of academic discipline, and other related aspects. A priority focus is given to publications in economics since the economic approach differs a lot from approaches in other social sciences.
In addition, the article explores the methodological characteristics of non-cognitive skills research in economics. The results of literature analysis point to the relevance of non-cognitive skills in explaining individual educational choices and allow drawing some inferences for education policy.
This paper studies the relationship between test scores and cognitive skills using two longitudinal data sets that track student performance in a national standardized exam in grades 6, 9, and 12 and post-secondary school outcomes in Mexico. Exploiting a large sample of twins to control for all between-family differences in school, household, and neighborhood inputs, we find that primary school test scores are a strong predictor of secondary education outcomes. Using a data set that links results in the national standardized test to later outcomes, we find that secondary school test scores predict university enrollment and hourly wages. These results indicate that, despite their limitations, large-scale student assessments can capture the skills they are meant to measure and can therefore be used to monitor student learning in developing countries.
Numerous studies have considered the important role of cognition in estimating the returns to schooling. How cognitive abilities affect schooling may have important policy implications, especially in developing countries during periods of increasing educational attainment. Using two longitudinal labor surveys that collect direct proxy measures of cognitive skills, we study the importance of specific cognitive domains for the returns to schooling in two samples. We instrument for schooling levels and we find that each additional year of schooling leads to an increase in earnings by approximately 18-20 percent. The estimated effect sizes—based on the two-stage least squares estimates—are above the corresponding ordinary least squares estimates. Furthermore, we estimate and demonstrate the importance of specific cognitive domains in the classical Mincer equation. We find that executive functioning skills (i.e., memory and orientation) are important drivers of earnings in the rural sample, whereas higher-order cognitive skills (i.e., numeracy) are more important for determining earnings in the urban sample. Although numeracy is tested in both samples, it is only a statistically significant predictor of earnings in the urban sample. (JEL I21, F63, F66, N37)
We discuss recent trends in human capital development and labour markets in the context of relevant public policies related to gender issues and national economic development. We start by providing a snapshot of the changing global labour markets, the evolution of demand for labour, and the ongoing evolution of the composition of human capital. An extensive discussion of recent academic research on gender, human capital development, and labour market outcomes follows.
We conclude with a critical review of the popular gender and labour market policies. We argue policies must be adjusted to ensure more inclusive approach in human capital development. The necessary adjustment must restore access to jobs and life-time learning opportunities to a broad range of increasingly disenfranchised population groups in the rapidly changing global labour, products and services markets. In particular, we show the growing risk that policies based on the rear-view mirror understanding of the world, the lack of appreciation of the changing demands for labour, and poor understanding of the real challenges in human capital development have already contributed to severe micro- and macroeconomic stress, and serious socio-political instability in many countries and regions. Though we draw particular attention to the experience of oil and gas producing developing countries, our findings and recommendations offer valuable universally applicable lessons.
The Rustbelt‐Sunbelt regional divide has captured economic geographers’ imagination since the 1980s. Sunbelt cities have been held up as a model of openness, highly attractive to the mobile and skilled. Yet Rustbelt cities are not unattractive to skilled workers though it is unclear which skills may be driving urban vitality through higher earnings. This paper examines the effect of cognitive, social and communication skills on individual earnings in cities of the Rustbelt and Sunbelt. Focusing on healthcare occupations, it finds that cognitive skill positively influences earnings. Conversely, social and communication skills are not likely to result in income payoffs. Returns to earnings in the Rustbelt and Sunbelt are comparable, and may explain why cities in the former region can remain attractive to healthcare professionals with cognitive skill.
Helping young people prepare to engage in work and life as productive adults is a central challenge for any society. Yet, many young people in the United States—particularly those from low-income or less educated families—find that the path to employment and economic security in adulthood is poorly marked or inaccessible.
Using an advanced methodology and longitudinal data, this report examines two main questions:
1) The quality of jobs (as measured by wages, benefits, hours, and job satisfaction) held by 29-year-olds who experienced disadvantage in adolescence
2) Whether particular employment, education, and training experiences in adolescence and early adulthood predict higher-quality jobs for 29-year-olds from disadvantaged backgrounds
O artigo aborda uma questão aparentemente antiga, como sugere a citação inicial tomada à edição de 1891 da revista Scientific American, de como avaliar e medir o valor ou o preço do conhecimento. A questão será estudada de várias perspectivas, tanto da prática como das ciências sociais. Tomando por base um conceito sociológico de conhecimento, discutiremos as perspectivas econômica, social, política e jurídica que podem nos conduzir à noção de preço do conhecimento.
While survey data supports a strong relationship between personality and labour market outcomes, the exact mechanisms behind this association remain unexplored. We take advantage of a controlled laboratory set-up to explore whether this relationship operates through productivity. Using a real-effort task, we analyse the impact of the Big Five personality traits on performance. We find that more neurotic subjects perform worse, and that more conscientious individuals perform better. These findings suggest that at least part of the effect of personality on labour market outcomes operates through productivity. In addition, we find evidence that gender and university major affect this relationship.
Assessing the welfare impact of consumer health advisories is a thorny task. Recently, Shimshack and Ward (2010) studied how U.S. households responded to FDA's 2001 mercury-in-fish advisory. They found that the average at-risk household reduced fish consumption by 21%, resulting in a 17%-reduction in mercury exposure at the cost of a 21%-reduction in cardioprotective omega-3 fatty acids. Based on a static assessment of the health costs and benefits Shimshack and Ward concluded that the advisory policy resulted in an overall consumer welfare loss. In this note, we propose a dynamic assessment that links the long-term cardiovascular health effects of the advisory to life-cycle consumption. We find that under reasonable assumptions the welfare loss might be much larger than suggested. Our analysis highlights the importance of accounting for dynamic effects when evaluating persistent changes in exposure to environmental health risks.
This paper explores the interface between personality psychology and economics. We examine the predictive power of personality and the stability of personality traits over the life cycle. We develop simple analytical frameworks for interpreting the evidence in personality psychology and suggest promising avenues for future research.
his paper presents formal models of child development that capture the essence of recent findings from the empirical literature on child development. The goal is to provide theoretical frameworks for interpreting the evidence from a vast empirical literature, for guiding the next generation of empirical studies and for formulating policy. We start from the premise that skill formation is a life-cycle process. It starts in the womb and goes on throughout most of the adult life. Families and firms have a role in this process that is at least as important as the role of schools. There are multiple skills and multiple abilities that are important for adult success. Abilities are both inherited and created, and the traditional debate of nature versus nurture is outdated and scientifically obsolete. The technology of skill formation has two additional important characteristics. The first one is that IQ and behavior are more plastic at early ages than at later ages. Furthermore, behavior is much more malleable than IQ as individuals age. The second is that human capital investments are complementary over time. Early investments increase the productivity of later investments. Early investments are not productive if they are not followed up by later investments. The returns to investing early in the life cycle are high. Remediation of inadequate early investments is difficult and very costly
This paper summarizes results from a validation study in which administrative records from a large manufacturing company are used to validate survey responses of a sample of workers from that company. Relatively little evidence of bias is found in reports of prior-year earnings and unemployment, the more salient fringe benefits, and union status. Quite diverse amounts of error variance are found in the survey reports, ranging from very small for reports of job tenure, annual earnings, and annual unemployment to very large for work hours and especially for a measure of hourly earnings constructed by dividing annual earnings by annual work hours. Furthermore, it is found that the conventional assumptions regarding measurement error in earnings models are not justified. In particular, there appears to be an important correlation between the measurement error in the reports of earnings and the level of job tenure, producing a bias in the estimated payoff to job tenure of roughly 30%. This result suggests a ne...
Using Norwegian populationpanel data with nearly career-longearnings histories, we provide a detailed picture of the causal relationship between schooling and earnings over the life cycle. To address selection bias, we apply three commonly used identification strategies. We find that additional schooling gives higher lifetime earnings and a steeper age-earnings profile, in line with predictions from human capital theory. Our preferred estimates imply an internal rate of return of around 11%, suggesting that it was highly profitable to acquire additional schooling. Our analysis reveals that Mincer regressions dramatically understate the returns to schooling because key assumptions are violated.
Importance:
The relationship between income and life expectancy is well established but remains poorly understood.
Objectives:
To measure the level, time trend, and geographic variability in the association between income and life expectancy and to identify factors related to small area variation.
Design and setting:
Income data for the US population were obtained from 1.4 billion deidentified tax records between 1999 and 2014. Mortality data were obtained from Social Security Administration death records. These data were used to estimate race- and ethnicity-adjusted life expectancy at 40 years of age by household income percentile, sex, and geographic area, and to evaluate factors associated with differences in life expectancy.
Exposure:
Pretax household earnings as a measure of income.
Main outcomes and measures:
Relationship between income and life expectancy; trends in life expectancy by income group; geographic variation in life expectancy levels and trends by income group; and factors associated with differences in life expectancy across areas.
Results:
The sample consisted of 1 408 287 218 person-year observations for individuals aged 40 to 76 years (mean age, 53.0 years; median household earnings among working individuals, $61 175 per year). There were 4 114 380 deaths among men (mortality rate, 596.3 per 100 000) and 2 694 808 deaths among women (mortality rate, 375.1 per 100 000). The analysis yielded 4 results. First, higher income was associated with greater longevity throughout the income distribution. The gap in life expectancy between the richest 1% and poorest 1% of individuals was 14.6 years (95% CI, 14.4 to 14.8 years) for men and 10.1 years (95% CI, 9.9 to 10.3 years) for women. Second, inequality in life expectancy increased over time. Between 2001 and 2014, life expectancy increased by 2.34 years for men and 2.91 years for women in the top 5% of the income distribution, but by only 0.32 years for men and 0.04 years for women in the bottom 5% (P < .001 for the differences for both sexes). Third, life expectancy for low-income individuals varied substantially across local areas. In the bottom income quartile, life expectancy differed by approximately 4.5 years between areas with the highest and lowest longevity. Changes in life expectancy between 2001 and 2014 ranged from gains of more than 4 years to losses of more than 2 years across areas. Fourth, geographic differences in life expectancy for individuals in the lowest income quartile were significantly correlated with health behaviors such as smoking (r = -0.69, P < .001), but were not significantly correlated with access to medical care, physical environmental factors, income inequality, or labor market conditions. Life expectancy for low-income individuals was positively correlated with the local area fraction of immigrants (r = 0.72, P < .001), fraction of college graduates (r = 0.42, P < .001), and government expenditures (r = 0.57, P < .001).
Conclusions and relevance:
In the United States between 2001 and 2014, higher income was associated with greater longevity, and differences in life expectancy across income groups increased over time. However, the association between life expectancy and income varied substantially across areas; differences in longevity across income groups decreased in some areas and increased in others. The differences in life expectancy were correlated with health behaviors and local area characteristics.
The Moving to Opportunity (MTO) experiment offered randomly selected families housing vouchers to move from high-poverty housing projects to lower-poverty neighborhoods. We analyze MTO's impacts on children's long-term outcomes using tax data. We find that moving to a lower-poverty neighborhood when young (before age 13) increases college attendance and earnings and reduces single parenthood rates. Moving as an adolescent has slightly negative impacts, perhaps because of disruption effects. The decline in the gains from moving with the age when children move suggests that the duration of exposure to better environments during childhood is an important determinant of children's long-term outcomes. (JEL I31, I38, J13, R23, R38).
In this article, the authors examined the evidence for linkages among 3 variables: schooling, intelligence, and income. They concluded that intelligence and schooling have a bidirectional relationship, with each variable influencing variations in the other. Moreover, changes in both schooling and intelligence influence variations in economic outcomes. Although any single study of the interdependency of these 3 variables can be criticized on the grounds that the data are correlational - and consequently are open to alternative interpretations - when viewed together, the evidence for their linked causality is quite convincing: Each increment in school attendance appears to convey significant increases not only in economic and social returns but also in psychometric intelligence. Thus, the value of schooling appears to extend beyond simply schooling's direct effect on income.
Do parents invest more in higher quality children, or do they compensate for lower quality by giving more to children with lower endowments? We answer this question in the context of a large-scale iodine supplementation program in Tanzania. We find that children with higher program exposure were more likely to receive necessary vaccines and were breastfed for longer. Siblings of treated children were also more likely to be immunized. Fertility behavior and investments at the time of birth were unaffected.This article is protected by copyright. All rights reserved.
A substantial literature documents the evolution of the college premium in the U.S. labor market over the last 40 years or so. There are at least three different interpretations of this fact: (i) shifts in the relative supply of and demand for college versus high school labor, (ii) shifts in the relative supply of and demand for skills in the college versus high school sector, and (iii) composition effects. We investigate how each of these components contributes to the dynamics of the college premium and find that all three play a role, but the increase in the college premium is primarily driven by the first component. We also find that during the 1980s, the college premium for high school workers diverged from the college premium for college workers and a substantial fraction of the gap that opens up is primarily due to the increase in the returns to cognitive skills.
Recent research shows that health at birth is affected by many factors, including maternal education, behaviors, and participation in social programs. In turn, endowments at birth are predictive of adult outcomes, and of the outcomes of future generations. Exposure to environmental pollution is one potential determinant of health at birth that has received increasing attention. A large literature outside of economics advocates for “Environmental Justice,” and argues that poor and minority families are disproportionately exposed to environmental hazards. I provide new evidence on this question, showing that children born to less educated and minority mothers are more likely to be exposed to pollution in utero and that white, college educated mothers are particularly responsive to changes in environmental amenities. I estimate that differences in exposure to toxic releases may explain 6% of the gap in incidence of low birth weight between infants of white college educated mothers and infants of black high school dropout mothers.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
In Project STAR, 11,571 students in Tennessee and their teachers were randomly assigned to classrooms within their schools from kindergarten to third grade. This article evaluates the long-term impacts of STAR by linking the experimental data to administrative records. We first demonstrate that kindergarten test scores are highly correlated with outcomes such as earnings at age 27, college attendance, home ownership, and retirement savings. We then document four sets of experimental impacts. First, students in small classes are significantly more likely to attend college and exhibit improvements on other outcomes. Class size does not have a significant effect on earnings at age 27, but this effect is imprecisely estimated. Second, students who had a more experienced teacher in kindergarten have higher earnings. Third, an analysis of variance reveals significant classroom effects on earnings. Students who were randomly assigned to higher quality classrooms in grades K–3—as measured by classmates' end-of-class test scores—have higher earnings, college attendance rates, and other outcomes. Finally, the effects of class quality fade out on test scores in later grades, but gains in noncognitive measures persist.
This paper formulates and estimates multistage production functions for child cognitive and noncognitive skills. Output is determined by parental environments and investments at different stages of childhood. We estimate the elasticity of substitution between investments in one period and stocks of skills in that period to assess the benefits of early investment in children compared to later remediation. We establish nonparametric identification of a general class of nonlinear factor models. A by-product of our approach is a framework for evaluating childhood interventions that does not rely on arbitrarily scaled test scores as outputs and recognizes the differential effects of skills in different tasks. Using the estimated technology, we determine optimal targeting of interventions to children with different parental and personal birth endowments. Substitutability decreases in later stages of the life cycle for the production of cognitive skills. It increases in later stages of the life cycle for the production of noncognitive skills. This finding has important implications for the design of policies that target the disadvantaged. For some configurations of disadvantage and outcomes, it is optimal to invest relatively more in the later stages of childhood.
We develop estimation methods that use the amount of selection on the observables in a model as a guide to the amount of selection on the unobservables. We show that if the observed variables are a random subset of a large number of factors that influence the endogenous variable and the outcome of interest, then the relationship between the index of observables that determines the endogenous variable and the index that determines the outcome will be the same as the relationship between the indices of unobservables that determine the two variables. In some circumstances this fact may be used to identify the effect of the endogenous variable. We also propose an informal way to assess selectivity bias based on measuring the ratio of selection on unobservables to selection on observables that would be required if one is to attribute the entire effect of the endogenous variable to selection bias. We use our methods to estimate the effect of attending a Catholic high school on a variety of outcomes. Our main conclusion is that Catholic high schools substantially increase the probability of graduating from high school and, more tentatively, college attendance. We do not find much evidence for an effect on test scores.
We show that if firms statistically discriminate among young workers on the basis of easily observable characteristics such as education, then as firms learn about productivity, the coefficients on the easily observed variables should fall, and the coefficients on hard-to-observe correlates of productivity should rise. We find support for this proposition using NLSY79 data on education, the AFQT test, father's education, and wages for young men and their siblings. We find little evidence for statistical discrimination in wages on the basis of race. Our analysis has a wide range of applications in the labor market and elsewhere. © 2000 the President and Fellows of Harvard College and the Massachusetts Institute of Technology
Identification in errors-in-variables regression models was recently extended to wide models classes by S. Schennach (Econometrica, 2007) (S) via use of generalized functions. In this paper the problems of non- and semi- parametric identification in such models are re-examined. Nonparametric identification holds under weaker assumptions than in (S); the proof here does not rely on decomposition of generalized functions into ordinary and singular parts, which may not hold. Conditions for continuity of the identification mapping are provided and a consistent nonparametric plug-in estimator for regression functions in the L₁ space constructed. Semiparametric identification via a finite set of moments is shown to hold for classes of functions that are explicitly characterized; unlike (S) existence of a moment generating function for the measurement