Working Paper: NBER ID: w5645
Authors: John Cawley; Karen Conneely; James Heckman; Edward Vytlacil
Abstract: This paper presents new evidence from the NLSY on the importance of meritocracy in American society. In it, we find that general intelligence, or g -- a measure of cognitive ability--is dominant in explaining test score variance. The weights assigned to tests by g are similar for all major demographic groups. These results support Spearman's theory of g. We also find that g and other measures of ability are not rewarded equally across race and gender, evidence against the view that the labor market is organized on meritocratic principles. Additional factors beyond g are required to explain wages and occupational choice. However, both blue collar and white collar wages are poorly predicted by g or even multiple measures of ability. Observed cognitive ability is only a minor predictor of social performance. White collar wages are more g loaded than blue collar wages. Many noncognitive factors determine blue collar wages.
Keywords: Cognitive Ability; Meritocracy; Labor Market; Wages; Social Outcomes
JEL Codes: J24; I20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| cognitive ability (g) (G53) | performance on cognitive tests (D29) |
| cognitive ability (g) (G53) | wages (J31) |
| cognitive ability (g) (G53) | occupational choices (J29) |
| demographic factors (J11) | pricing of abilities in labor market (J29) |
| cognitive ability (g) (G53) | wage disparities (J31) |
| structural factors (L10) | labor market outcomes (J48) |