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IFAU - Institute for Evaluation of Labour Market and Education Policy Working Paper Series
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 2005:16:
Swedish evidence on the impact of cognitive and non-cognitive ability on earnings – an extended pre-market factor approach

Johnny Zetterberg ()

Abstract: This paper investigates the impact on earnings of non-cognitive ability, measured in terms of individuals’ 'self-esteem' on earnings. Starting with the pre-market factor approach suggested by Neal & Johnson (1996) a main finding is that measures of relative self-esteem along with cognitive ability are positively correlated with earnings. The analysis also reveals that the returns to cognitive and non-cognitive ability vary over the earnings-distribution: the returns are larger at higher levels of earnings than at low levels. While qualitatively robust, the effects decrease in magnitude when an extended version of the pre-market factor model is used.

Keywords: Incentive-influencing preferences; cognitive ability; non-cognitive ability; relative and absolute self-esteem; earnings distribution; (follow links to similar papers)

JEL-Codes: J31; M54; (follow links to similar papers)

42 pages, June 21, 2005

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