Using Genes to Explore the Effects of Cognitive and Non-cognitive Skills on Education and Labor Market Outcomes

Abstract

A large literature establishes that cognitive and non-cognitive skills are strongly correlated with educational attainment and professional achievement. Isolating the causal effects of these traits on career outcomes is complicated by reverse causality and selection issues. We suggest a new approach: using within-family differences in the genetic tendency to exhibit the relevant traits as a source of exogenous variation. Genes are fixed over the life cycle and genetic differences between full siblings are random, making it possible to establish the causal effects of within-family variation in genetic tendencies. We link genetic data from individuals in the Swedish Twin Registry to government registry data and find evidence for causal effects of the genetic predispositions towards cognitive skills, personality traits, and economic preferences on professional achievement and educational attainment. Our results also demonstrate that education and labor market outcomes are partially the result of a genetic lottery.

Keywords: personality traits, economic preferences, cognitive skills, labor markets, education

JEL Classification: I26, J24, D91