The Differential Returns to Cognitive Ability in the Labour and Capital Market

Research on Monday Seminar
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Speaker
Daniel Waldenstrom
Date
Monday 5 Dec 2022, 14:30 - 15:30
Type
Seminar
Room
2-22
Building
Polak Building
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We study the returns to cognitive ability in the labour and capital market. Using population-wide Swedish military enlistment data and administrative tax records, we find that ability matters significantly more for capital income than for labour earnings.

This result persists after controlling for savings, bequests, educational attainment, occupational choice, and the parental economic position. The pattern is similar for men and women, surprisingly robust over time, and larger pre-tax than post-tax. In addition, cognitive ability is significantly positively correlated with wealth returns.

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See also

Parental Income in the Labour Market

Jean-William Laliberté (University of Calgary)
ESE - Family Behind Computer

Do People Distinguish Income from Wealth Inequality? Evidence from the Netherlands

Thomas Douenne (University of Amsterdam)

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