Working Paper: NBER ID: w12006
Authors: James J. Heckman; Jora Stixrud; Sergio Urzua
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.
Keywords: cognitive skills; noncognitive skills; labor market outcomes; social behavior; education
JEL Codes: C31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Cognitive skills (G53) | Labor market outcomes (J48) |
| Noncognitive skills (G53) | Labor market outcomes (J48) |
| Noncognitive skills (G53) | Schooling decisions (I21) |
| Noncognitive skills (G53) | Work experience (M53) |
| Noncognitive skills (G53) | Occupational choice (J29) |
| Noncognitive skills (G53) | Risky behaviors (I12) |
| Cognitive skills (G53) | Risky behaviors (I12) |
| Noncognitive skills (women) (J16) | Behavior (C99) |
| Noncognitive skills (men) (D91) | Behavior (C99) |