The Labor Market Returns to Cognitive and Noncognitive Ability: Evidence from the Swedish Enlistment

77 Pages Posted: 25 Mar 2009 Last revised: 3 Jun 2015

See all articles by Erik Lindqvist

Erik Lindqvist

Stockholm School of Economics; Research Institute of Industrial Economics (IFN)

Roine Vestman

Stockholm University - Department of Economics; Swedish House of Finance

Date Written: March 24, 2009

Abstract

We use data from the military enlistment for a large representative sample of Swedish men to assess the importance of cognitive and noncognitive ability for labor market outcomes. The measure of noncognitive ability is based on a personal interview conducted by a psychologist. Unlike survey-based measures of noncognitive ability, this measure is a substantially stronger predictor of labor market outcomes than cognitive ability. In particular, we find strong evidence that men who fare badly in the labor market - in the sense of long-term unemployment or low annual earnings - lack noncognitive but not cognitive ability. We point to a technological explanation for this result. Noncognitive ability is an important determinant of productivity irrespective of occupation or ability level, though it seems to be of particular importance for workers in a managerial position. In contrast, cognitive ability is valuable only for men in qualified occupations. As a result, noncognitive ability is more important for men at the verge of being priced out of the labor market.

Keywords: Personality, noncognitive ability, cognitive ability, intelligence, human capital

JEL Classification: J21, J24, J31

Suggested Citation

Lindqvist, Erik and Vestman, Roine, The Labor Market Returns to Cognitive and Noncognitive Ability: Evidence from the Swedish Enlistment (March 24, 2009). IFN Working Paper No. 794. Available at SSRN: https://ssrn.com/abstract=1367603 or http://dx.doi.org/10.2139/ssrn.1367603

Erik Lindqvist (Contact Author)

Stockholm School of Economics ( email )

PO Box 6501
Stockholm, 11383
Sweden

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Stockholm, 102 15
Sweden

Roine Vestman

Stockholm University - Department of Economics ( email )

Universitetsvägen 10 A
House A, floor 4 and 7
Frescati, Stockholm
Sweden

HOME PAGE: http://www.ne.su.se/

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

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