Cognitive Ability, Non-Cognitive Ability, and Employee Mobility

Pooyan Khashabi, Tobias Kretschmer, Ali Mohammadi and Joseph Raffiee

No 19819, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We explore the relationship between two dimensions of human capital – cognitive and non-cognitive ability – and employee mobility. Using Swedish employer-employee matched microdata containing cognitive and non-cognitive ability scores for the population of Swedish men, we find that cognitive (non-cognitive) ability is negatively (positively) associated with employee mobility. We suggest a theoretical explanation for these diverging patterns through the employer learning and statistical discrimination (EL-SD) framework: Differences in observability of these dimensions of human capital introduce differential information frictions in the labor market. Analyses pertaining to overall wages, initial wages, and wage growth trajectories suggest that cognitive abilities are less observable than non-cognitive abilities in the labor market. Our data, analysis, and theoretical framework inform managers tasked with the strategic management and retention of human capital.

JEL-codes: J24 J60 M50 (search for similar items in EconPapers)
Date: 2024-12
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