The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior

80 Pages Posted: 22 Apr 2006

See all articles by James J. Heckman

James J. Heckman

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); American Bar Foundation; Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute)

Jora Stixrud

University of Chicago - Department of Economics

Sergio Urzua

Northwestern University

Date Written: February 2006

Abstract

This paper establishes that a low dimensional vector of cognitive and noncognitive skills explains a variety of labor market and behavioral outcomes. For many dimensions of social performance cognitive and noncognitive skills are equally important. Our analysis addresses the problems of measurement error, imperfect proxies, and reverse causality that plague conventional studies of cognitive and noncognitive skills that regress earnings (and other outcomes) on proxies for skills. Noncognitive skills strongly influence schooling decisions, and also affect wages given schooling decisions. Schooling, employment, work experience and choice of occupation are affected by latent noncognitive and cognitive skills. We study a variety of correlated risky behaviors such as teenage pregnancy and marriage, smoking, marijuana use, and participation in illegal activities. The same low dimensional vector of abilities that explains schooling choices, wages, employment, work experience and choice of occupation explains these behavioral outcomes.

Suggested Citation

Heckman, James J. and Stixrud, Jora and Urzua, Sergio Samuel, The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior (February 2006). NBER Working Paper No. w12006. Available at SSRN: https://ssrn.com/abstract=881240

James J. Heckman (Contact Author)

University of Chicago - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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American Bar Foundation

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Institute for the Study of Labor (IZA)

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CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

Jora Stixrud

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

Sergio Samuel Urzua

Northwestern University ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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