Do the cognitive skills of school dropouts matter in the labor market?

Does the labor market reward cognitive skill differences among those with t he fewest educational attainment-high school dropouts? This paper explores this question using a data set that provides information on the universe of dropouts who last attempted the GED exams in Florida and New York in 1989 and 1990. This sample reduces variation in unmeasured variables such as mot ivation that are correlated with cognitive skills. We examine the returns t o basic cognitive skills as measured by GED rest scores. The results indica te substantial earnings returns to cognitive skills for all groups except w hite male dropouts.