Do Cognitive Test Scores Explain Higher US Wage Inequality?

Francine Blau and Lawrence Kahn

No 8210, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using microdata from the 1994-6 International Adult Literacy Survey (IALS), we examine the role of cognitive skills in explaining higher wage inequality in the US. We find that while the greater dispersion of cognitive test scores in the US plays a part in explaining higher US wage inequality, higher labor market prices (i.e., higher returns to measured human capital and cognitive performance) and greater residual inequality still play important roles for both men and women. And we find that, on average, prices are quantitatively considerably more important than differences in the distribution of test scores in explaining the relatively high level of US wage inequality. This finding holds up when we examine natives only and when we correct for sample selection.

JEL-codes: J3 J5 (search for similar items in EconPapers)
Date: 2001-04
New Economics Papers: this item is included in nep-lab
Note: LS
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Citations: View citations in EconPapers (33)

Published as Francine D. Blau & Lawrence M. Kahn, 2005. "Do Cognitive Test Scores Explain Higher U.S. Wage Inequality?," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 184-193, December.

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Working Paper: Do Cognitive Test Scores Explain Higher U.S. Wage Inequality? (2004)
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