The Importance of Cognitive Domains and the Returns to Schooling in South Africa: Evidence from Two Labor Surveys

Abstract

Numerous studies have considered the important role of cognition in estimating the returns to schooling. How cognitive abilities affect schooling may have important policy implications, especially in developing countries during periods of increasing educational attainment. Using two longitudinal labor surveys that collect direct proxy measures of cognitive skills, we study the importance of specific cognitive domains for the returns to schooling in two samples. We instrument for schooling levels and we find that each additional year of schooling leads to an increase in earnings by approximately 18-20 percent. The estimated effect sizes-based on the two-stage least squares estimates-are above the corresponding ordinary least squares estimates. Furthermore, we estimate and demonstrate the importance of specific cognitive domains in the classical Mincer equation. We find that executive functioning skills (i.e., memory and orientation) are important drivers of earnings in the rural sample, whereas higher-order cognitive skills (i.e., numeracy) are more important for determining earnings in the urban sample. Although numeracy is tested in both samples, it is only a statistically significant predictor of earnings in the urban sample.

Perceived Returns as a Determinant of Private Demand for Postgraduate Studies in Selected Universities in Kenya

“…These findings highlight that perceived economic benefits play a pivotal role in driving the private demand for postgraduate studies within Kenyan universities. This aligns with the observations made by Nikolov et al (2020), who found that pursuing further education led to an increase in earnings by 18-20% in South Africa. Similarly, Netcoh (2016) advanced that education and training contribute to economic gains such as raised wages and an increase in domestic product.…”

“…In South Africa, Nikolov et al (2020) revealed that each additional year of schooling leads to an increase in earnings ranging from 18 to 20 percent. Moreover, studies in the country have demonstrated that the benefits of higher education are on the rise, as advanced education empowers graduates to access higher-paying jobs and enhanced opportunities for career advancement (Salisbury, 2016;Horn, 2018).…”

Writing Tips for Crafting Effective Economics Research Papers – 2023-2024 Edition

“…• Recap your core findings o Offer an intuitive and gripping account of these results o Compare your results to the existing literature and emphasize why the results are novel o Discuss the mechanisms driving your principal findings • Provide caveats and acknowledge significant limitations of your approach • Suggest promising avenues for future research • Explore potential policy implications Let's consider an example from Nikolov and Jimi (2020) and how their study on the returns to various cognitive skills for labor market outcomes in South Africa illustrates an effective conclusion section in light of the attributes just highlighted for an effective conclusion section. Here is the excerpt:…”

Writing Tips for Economics Research Papers – 2021-2022 Edition

“…Here is an example of how Nikolov and Jimi (2020) write up their concluding remarks in a study that examines the returns to cognitive skills for labor market outcomes in South Africa. Note each of the following:…”