This article establishes that a low-dimensional vector of cognitive and noncognitive skills explains a variety of labor market and behavioral outcomes. Our analysis addresses the problems of measurement error, imperfect proxies, and reverse causality that plague conventional studies. 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.
The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social BehaviorJ. Heckman, J. Stixrud, and Sergio Urzua ,
3( 24 )
Journal of Labor Economics