Testing the Validity of Item Non-Response as a Proxy for Cognitive and Non-Cognitive Skills

53 Pages Posted: 7 Mar 2015

See all articles by Sonja C. Kassenboehmer

Sonja C. Kassenboehmer

Monash University - Centre for Health Economics

Stefanie Schurer

Victoria University of Wellington - School of Economics and Finance

Felix Leung

University of Melbourne - Melbourne Institute (MIAESR)

Abstract

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

Suggested Citation

Kassenboehmer, Sonja C. and Schurer, Stefanie and Leung, Felix, Testing the Validity of Item Non-Response as a Proxy for Cognitive and Non-Cognitive Skills. IZA Discussion Paper No. 8874. Available at SSRN: https://ssrn.com/abstract=2575054

Sonja C. Kassenboehmer (Contact Author)

Monash University - Centre for Health Economics ( email )

Building 75, 15 Innovation Walk
Monash University
Clayton, Victoria 3800
Australia

Stefanie Schurer

Victoria University of Wellington - School of Economics and Finance ( email )

P.O. Box 600
Wellington 6001
New Zealand
+64-4-4636708 (Phone)

HOME PAGE: http://www.victoria.ac.nz/sef/staff/stefanie-schurer.aspx

Felix Leung

University of Melbourne - Melbourne Institute (MIAESR) ( email )

Level 5, FBE Building, 111 Barry Street
161 Barry Street
Carlton, VIC 3053
Australia

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