THE IMPACT OF COGNITIVE AND NONCOGNITIVE SKILLS ON PROFESSIONAL SALARIES IN AN EMERGING ECONOMY, CHILE

Abstract

Professional salaries in Chile are here explained on the basis not only of traditional human capital variables but also of variables indicative of other cognitive and noncognitive skills. As might be expected, college entrance scores (SAT), our measure of advanced cognitive skills, are found to impact strongly and nonlinearly on salaries. More surprisingly, ranking in one’s high school graduation class raises one’s salary 10 years later by the equivalent of one year of additional experience, suggesting that ranking stands for a more permanent noncognitive skill such as effort or self-discipline. As is typically found, women earn less than men, but, to our surprise, they also have lower asking salaries than men.