The Noncognitive Determinants of Labor Market and Behavioral Outcomes: Introduction to the Symposium

The Noncognitive Determinants of Labor Market and Behavioral Outcomes Introduction to the Symposium Bas ter Weel I. Introduction Most of the economic literature has focused on the acquisition of and returns to investments in cognitive skills when trying to explain labor market outcomes . Only a few economists have emphasized the importance of noncognitive skills to predict labor market and behavioral outcomes. Until now, it has been rather unclear what noncognitive skills are (and how they can be measured) and how they influence labor market and behavioral outcomes.1 For instance, cognitive skills are assessed by language and mathematical composites or by aptitude and ability tests. Most people agree that these tests are useful tools. The literature on cognitive tests and the measurement of intelligence shows that one dominant factor is underlying cognitive processes, which we can label general intelligence , g. Noncognitive skills are often defined and measured in terms of work habits, such as effort, discipline, and determination, or in terms of behavioral traits, such as self-confidence, sociability, and emotional stability. No single factor has emerged in the psychological literature and it is unlikely that one will be found, given the diversity of traits subsumed under the category of noncognitive skills. More importantly, it is unclear how to include noncognitive skills in the standard economic model. From the point of view of economics, the diversity of definitions and measures of noncognitive skills raise questions of whether noncognitive skills can be seen as a set of stable traits, can be invested in like in cognitive skills, or can yield labor market returns. In addition, it is unclear how investment mechanisms work and how noncognitive skills yield labor market returns. Bas ter Weel is department head of the international economics department with the CPB Netherlands Bureau for Economic Policy Analysis in The Hague and a senior researcher with UNU-MERIT, Maastricht University, the Netherlands. ISSN 022-166X E-ISSN 1548-8004 Ó 2008 by the Board of Regents of the University of Wisconsin System THE JOURNAL OF HUMAN RESOURCES d XLIII d 4 1. There has been discussion about the term ‘‘noncognitive’’ skills. Throughout this symposium it is used to identify, analyze and measures skills other than the traditional cognitive skills measures applied by economists (e.g., IQ). See Borghans et al. (2008) for a more indepth discussion. Of course, we know that some aspects of ability are not measured or defined by cognitive ability. In the psychological literature, theories of social, (inter)personal, and emotional intelligence or ability have been developed to show that IQ measures only one aspect of intelligence, thereby neglecting other important aspects that explain outcomes. The idea that it is possible to distinguish these forms of ability from cognitive ability is not new and common sense and everyday life tells us that we spend much of our time in social interactions with others. More importantly, some people are more successful in doing so than others, which is likely reflected in labor market outcomes. Hence, theories of interpersonal and emotional intelligence have been developed. Also, the management literature and personal help books stress the importance of social and interpersonal ability as distinct from cognitive ability. The problem with these theories and arguments is that there are many instances of competencewiththesocialdomain,whichmakesithardtodeviseteststhatmeasurenoncognitiveability .Severaltestshavebeendeveloped,butitisunclearhowthesetestsrelate to socioeconomic outcomes. Most tests are designed to diagnose the presence of mental diseases and include a threshold, which leads to 0-1 outcomes that are not very useful for the typeof analysis economists are looking for. Other tests focus onparticular competences or abilities, such as determination, judging, or understanding other people. This makes it hard to find compelling evidence for theories of ‘‘general’’ noncognitive ability. The aim of this symposium is to shed light on how to incorporate the noncognitive side of ability in economic theory and to empirically assess and explain its role in labor market and behavioral outcomes. To do so, this symposium starts with novel research on the formation of cognitive and noncognitive skills over the life cycle and the identification of sensitive and crucial periods for investment in skills. It also contains an application of how early investments (or a lack of early investments) affect later outcomes. Second, the symposium...