Ability, Schooling Inputs and Earnings: Evidence from the NELS

Utilizing the National Educational Longitudinal Study data, this paper examines the role of pre-market cognitive and noncognitive abilities, as well as schooling inputs, on young men's earnings. In addition to the conditional mean, we estimate the impacts over the earnings distribution using recently developed (instrumental) quantile regression techniques. Our results show that noncognitive ability is an important determinant of earnings, but the effects are not uniform across the distribution. We find noncognitive ability to be most effective for lower quantiles. Cognitive ability, on the other hand, shows a reversed pattern with more pronounced effects at the upper tail of the earnings distribution. We also find that, on average, pupil-teacher ratio is a significant determinant of earnings. However, similar to ability, the effects are not homogeneous