Returns to cognitive skills: new evidence from 14 nations

This study examines the role of cognitive skills on labor market outcomes in 14 developed countries. In contrast to standard Mincer-type regressions, we utilize a structural
modeling approach that can take into account different types of skills on different economic outcomes. The results, based on data from the OECD PIAAC project, provide
strong evidence that the income returns to adult cognitive skills are substantially large across the OECD, net of education, occupational status, gender and family background.
However, the size of these effects, particularly in comparison with returns to education, vary greatly across countries. While in all countries examined education is strongly
associated with cognitive skills, those skills translate into more prestigious occupations and higher incomes in countries that can be tentatively described as more innovative,
as well as have less stratified educational systems. We discuss potential explanations for this, which can serve as a basis for further research.