IDEAS home Printed from https://ideas.repec.org/p/diw/diwwpp/dp655.html
   My bibliography  Save this paper

Cognitive Abilities and Labour Market Outcomes

Author

Listed:
  • Silke Anger
  • Guido Heineck

Abstract

We contribute to the literature on the relationship between cognitive abilities and labour market outcomes providing first evidence for Germany. In particular, cross-sectional data from the German Socio-Economic Panel (SOEP) are used, which include two measures of cognitive ability, one test of fluid mechanics (speed test) and another test of crystallised pragmatics (word fluency test). We find a positive relationship between cognitive abilities and economic activity, as workers with high ability test scores are less likely to be unemployed. In addition, results from Mincer-type OLS and 2SLS regressions suggest that mechanics abilities are correlated with wages in a significantly positive way for West German workers, even when educational attainment is controlled for, whereas pragmatics of cognition do not affect earnings significantly. However, we also find that ability and education are inseparable determinants of earnings, which confirms findings of recent studies for other countries.

Suggested Citation

  • Silke Anger & Guido Heineck, 2006. "Cognitive Abilities and Labour Market Outcomes," Discussion Papers of DIW Berlin 655, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp655
    as

    Download full text from publisher

    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.55666.de/dp655.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jeffrey S. Zax & Daniel I. Rees, 2002. "IQ, Academic Performance, Environment, and Earnings," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 600-616, November.
    2. Murnane, Richard J & Willett, John B & Levy, Frank, 1995. "The Growing Importance of Cognitive Skills in Wage Determination," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 251-266, May.
    3. Patrick Royston, 2004. "Multiple imputation of missing values," Stata Journal, StataCorp LP, vol. 4(3), pages 227-241, September.
    4. Neal, Derek A & Johnson, William R, 1996. "The Role of Premarket Factors in Black-White Wage Differences," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 869-895, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sofie Cabus & Joanna Napierala & Stephanie Carretero, 2021. "The Returns to Non-Cognitive Skills: A Meta-Analysis," JRC Working Papers on Labour, Education and Technology 2021-06, Joint Research Centre.
    2. Ksenia V. Rozhkova & Natalya Yemelina & Sergey Yu. Roshchin, 2021. "Can Non-Cognitive Skills Explain The Gender Wage Gap In Russia? An Unconditional Quantile Regression Approach," HSE Working papers WP BRP 252/EC/2021, National Research University Higher School of Economics.
    3. David Haardt, 2007. "Cognitive functioning and labour force participation among older men and women in England," Social and Economic Dimensions of an Aging Population Research Papers 222, McMaster University.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lin, Dajun & Lutter, Randall & Ruhm, Christopher J., 2018. "Cognitive performance and labour market outcomes," Labour Economics, Elsevier, vol. 51(C), pages 121-135.
    2. Anger, Silke & Heineck, Guido, 2010. "Cognitive Abilities and Earnings – First Evidence for Germany," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 17(7), pages 699-702.
    3. Battaglia, Marianna & Lebedinski, Lara, 2015. "Equal Access to Education: An Evaluation of the Roma Teaching Assistant Program in Serbia," World Development, Elsevier, vol. 76(C), pages 62-81.
    4. David J. Deming, 2017. "The Growing Importance of Social Skills in the Labor Market," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(4), pages 1593-1640.
    5. Brown, Charles & Corcoran, Mary, 1997. "Sex-Based Differences in School Content and the Male-Female Wage Gap," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 431-465, July.
    6. Caselli, Francesco, 2005. "Accounting for Cross-Country Income Differences," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 9, pages 679-741, Elsevier.
    7. Devah Pager, 2007. "The Use of Field Experiments for Studies of Employment Discrimination: Contributions, Critiques, and Directions for the Future," The ANNALS of the American Academy of Political and Social Science, , vol. 609(1), pages 104-133, January.
    8. Eric A. Hanushek & Victor Lavy & Kohtaro Hitomi, 2008. "Do Students Care about School Quality? Determinants of Dropout Behavior in Developing Countries," Journal of Human Capital, University of Chicago Press, vol. 2(1), pages 69-105.
    9. Piopiunik, Marc & Schwerdt, Guido & Simon, Lisa & Woessmann, Ludger, 2020. "Skills, signals, and employability: An experimental investigation," European Economic Review, Elsevier, vol. 123(C).
    10. Finnie, Ross & Meng, Ronald, 2006. "The Importance of Functional Literacy: Reading and Math Skills and Labour Market Outcomes of High School Drop-outs," Analytical Studies Branch Research Paper Series 2006275e, Statistics Canada, Analytical Studies Branch.
    11. Sanz-de-Galdeano, Anna & Vuri, Daniela, 2004. "Does Parental Divorce Affect Adolescents' Cognitive Development? Evidence from Longitudinal Data," IZA Discussion Papers 1206, Institute of Labor Economics (IZA).
    12. Mahdi Gholami & Samuel Muehlemann, 2024. "Pathways to Prosperity: The Roles of Cognitive and Non-Cognitive Skills in Employer Quality and Early Career Earnings," Economics of Education Working Paper Series 0212, University of Zurich, Department of Business Administration (IBW), revised Dec 2024.
    13. Eric A. Hanushek, 2004. "Some Simple Analytics of School Quality," NBER Working Papers 10229, National Bureau of Economic Research, Inc.
    14. Gonzalo Castex & Evgenia Kogan Dechter, 2014. "The Changing Roles of Education and Ability in Wage Determination," Journal of Labor Economics, University of Chicago Press, vol. 32(4), pages 685-710.
    15. Büchner, C.I.R. & Smits, W. & van der Velden, R.K.W., 2012. "Education, cognitive skills and earnings of males and females," ROA Research Memorandum 002, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    16. Magnus Carlsson & Gordon B. Dahl & Björn Öckert & Dan-Olof Rooth, 2015. "The Effect of Schooling on Cognitive Skills," The Review of Economics and Statistics, MIT Press, vol. 97(3), pages 533-547, July.
    17. Kitae Sohn, 2012. "The dynamics of the evolution of the Black--White test score gap," Education Economics, Taylor & Francis Journals, vol. 20(2), pages 175-188, April.
    18. James J. Heckman, 2008. "Schools, Skills, And Synapses," Economic Inquiry, Western Economic Association International, vol. 46(3), pages 289-324, July.
    19. Petra E. Todd & Kenneth I. Wolpin, 2007. "The Production of Cognitive Achievement in Children: Home, School, and Racial Test Score Gaps," Journal of Human Capital, University of Chicago Press, vol. 1(1), pages 91-136.
    20. Francine D. Blau & Lawrence M. Kahn, 2005. "Do Cognitive Test Scores Explain Higher U.S. Wage Inequality?," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 184-193, February.

    More about this item

    Keywords

    Cognitive ability; earnings regressions; returns to education; ability bias; unemployment probability;
    All these keywords.

    JEL classification:

    • 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
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:diw:diwwpp:dp655. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bibliothek (email available below). General contact details of provider: https://edirc.repec.org/data/diwbede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.