Thursday, May 07, 2009

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

Lindqvist, Erik (Research Institute of Industrial Economics (IFN))
Westman, Roine (New York University)

IFN Working Paper No. 794, 2009

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.

1 comment:

Martin Ryan said...

I should have mentioned that this is notable because it uses measures of noncognitive ability from interviews with psychologists. Or have I simply been looking at purely survey-based research too long? Any thoughts Michael?