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Wage premia for skills: The complementarity of cognitive and non-cognitive skills

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  • Marta Palczynska

Abstract

This paper provides evidence on the association between individuals' cognitive abilities, personality traits, and earnings. I find that cognitive skills and certain personality traits are complements. In particular, I find that cognitive skills and emotional stability are complementary, with neurotic individuals having significantly lower returns to their cognitive skills. Furthermore, my results indicate that agreeableness, neuroticism, and – surprisingly – grit are penalised signi?cantly in the labour market; and that there is a positive relationship between conscientiousness and wages. Finally, I observe that, contrary to previous findings, women and men have similar returns to personality traits. I use well-established measures of cognitive skills and personality: namely, competence tests from the PIAAC survey to assess cognitive skills, as well as the Big Five inventory and the Grit scale to assess personality traits.

Suggested Citation

  • Marta Palczynska, 2018. "Wage premia for skills: The complementarity of cognitive and non-cognitive skills," IBS Working Papers 09/2018, Instytut Badan Strukturalnych.
    • Handle: RePEc:ibt:wpaper:wp092018
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    Cited by:

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    2. Wenjing Yu & Yiwei Qian & Cody Abbey & Huan Wang & Scott Rozelle & Lauren Ann Stoffel & Chenxu Dai, 2022. "The Role of Self-Esteem in the Academic Performance of Rural Students in China," IJERPH, MDPI, vol. 19(20), pages 1-16, October.

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    More about this item

    Keywords

    cognitive skills; personality traits; social skills; earnings;
    All these keywords.

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • 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

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