The Impact of Cognitive Skills on Wages

Abstract

This chapter begins by examining the impact of cognitive skills on the wages of private and public sector workers. These findings are then combined with the results of Chapter 4 to estimate the returns to government investments that raise school quality. Chapters 6 and 7 carry out similar analyses using estimates of the impact of cognitive skills on the incomes of the self-employed in non-agricultural and agricultural occupations, respectively. As a group, these three chapters provide a comprehensive investigation of the returns to investments in school quality as measured by the higher incomes that result from increased school attainment and increased cognitive skills acquired per year of schooling.