The Growing Importance of Cognitive Skills in Wage Determination

Abstract This chapter discusses the importance of cognitive skills in wage determination. It examines two large surveys of twenty-four-year-old high school graduates to show that cognitive skills were a significantly more important predictor of real wages in 1986 than in 1978. In this survey, the mathematics test score was used as a measure of cognitive skills. The chapter also discusses the effects of family background and educational attainment on wage patterns.