Testing the Validity of Item Non-Response as a Proxy for Cognitive and Non-Cognitive Skills
53 Pages Posted: 7 Mar 2015
Cognitive and non-cognitive skills are important determinants of labor market outcomes, but are often unobserved. We propose a proxy for these skills derived from item non-response information and a procedure to test its validity. Exploiting a unique data-collection feature of an Australian survey, we find that fraction answered on a self-completion questionnaire fulfils all necessary requirements to be a valid proxy for cognitive skills and outperforms alternative proxies derived from paradata. Fraction answered captures a third of the effect of cognitive ability on wages and education. We provide a simple solution to reduce omitted-variable biases by up to 11%.
Keywords: paradata, item non-response, proxy-variable approach, cognitive ability, non-cognitive skills, wages, education
JEL Classification: J24, C18, C83, I20, J30
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