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Individual Characteristics and Earnings

Author

Listed:
  • Nurfatima Jandarova

    (Tampere University, Finnish Centre of Excellence in Tax Systems Research (FIT))

  • Aldo Rustichini

    (University of Minnesota)

Abstract

We study how observed individual characteristics affect earnings of individuals. The characteristics we study are individual personality traits (including cognitive ability) and family background. We make use of data providing information on the individual characteristics rather than estimating them as latent variables. Their contribution may be indirect (facilitating the acquisition of education) or direct (perhaps affecting productivity). We estimate the fraction of these two contributions through regression analysis and structural model, and find that the contribution of both pathways is significant. These characteristics may be in part determined endogenously. To estimate the proportion due to original individual characteristics we use measures provided by Polygenic Scores for education years and fluid intelligence. The marginal effects of these scores is significant and high. The indirect contribution (operating though acquisition of college) is around one third of the total effect.

Suggested Citation

  • Nurfatima Jandarova & Aldo Rustichini, 2024. "Individual Characteristics and Earnings," Working Papers 26, Finnish Centre of Excellence in Tax Systems Research.
    • Handle: RePEc:fit:wpaper:26
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    References listed on IDEAS

    as
    1. Isacsson, Gunnar, 1999. "Estimates of the return to schooling in Sweden from a large sample of twins," Labour Economics, Elsevier, vol. 6(4), pages 471-489, November.
    2. Orley Ashenfelter & David J. Zimmerman, 1997. "Estimates Of The Returns To Schooling From Sibling Data: Fathers, Sons, And Brothers," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 1-9, February.
    3. Erik Lindqvist & Roine Vestman, 2011. "The Labor Market Returns to Cognitive and Noncognitive Ability: Evidence from the Swedish Enlistment," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 101-128, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    education; cognitive skills; noncognitive skills; family background; polygenic score;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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