The returns to cognitive and non-cognitive abilities in Germany

et al., 2009) using German data. In addition to these studies, our paper provides the first joint
evidence on the relationship between cognitive abilities, personality and earnings in
Germany. Accounting for both intelligence and personality is important, since they have
been shown to be related to each other (e.g., Sternberg and Ruzgis, 1994; Furnham et al.,
1998). Until now, the impact of both cognitive and non-cognitive skills on labor market
outcomes has been addressed only by a few studies on the UK and mainly the US (Osborne
Groves, 2005; Heckman, et al., 2006; Mueller and Plug, 2006, Cebi 2007). In addition to
previous analyses, which are based on only one or few dimensions of personality, our study
uses a greater variety of personality measures. We are therefore able to directly compare
different personality indicators which have been analyzed only separately until now.
Moreover, complementing prior research on the UK and the US, our study examines whether
the link between cognition, personality and labor market success can be found also in
Germany, which has a more regulated labor market and a less meritocratic society. It might
moreover be the case that the mainly free access to schooling (at no or very low cost) in
Germany has other implications for the returns to cognitive and non-cognitive skills relative
to the returns to education than in anglo-saxon countries.
2. Background, previous findings and expectations
Conceptual considerations
A gradient between individuals’ cognitive abilities and their behavior on the job may
be expected since it is plausible to assume that individuals with higher cognitive abilities are
able to process new information more quickly. They may likewise be expected to perform
better if challenged with more complex tasks than individuals with fewer cognitive skills.
The existing evidence on the impact of cognitive skills on labor market success however is
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