Thursday 23 August 2012

The Effect of Early Cognitive Ability on Earnings Over the Life-Cycle

an article by Torberg Falch (Norwegian University of Science and Technology) and Sofia Sandgren Massih (Uppsala University) published in LABOUR Volume 26 Issue 3 (September 2012)

Abstract

This paper utilizes information on cognitive ability at age 10 and earnings information from age 20 to 65 to estimate the return to ability over the life-cycle.

Cognitive ability measured at an early age is not influenced by the individual’s choices of schooling.

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 of having a supervisory position.

JEL classifications: J24, J30, J31


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