THE GROWING IMPORTANCE OF COGNITIVE SKILLS IN WAGE DETERMINATION

Using data from two longitudinal surveys of American high school senio rs, we show that basic cognitive skills had a larger impact on wages f or 24-year-old men and women in 1986 than in 1978. For women, the incr ease in the return to cognitive skills between 1978 and 1986 accounts for all of the increase in the wage premium associated with post-secon dary education. We also show that high school seniors' mastery of basi c cognitive skills had a much smaller impact on wages two years after graduation than on wages six years after graduation.