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Title: Reading Skills and Earnings: Why Do Doing Words Good Hurt You’re Wages?
Resulting in 1 citation.
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Sanders, Carl |
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Reading Skills and Earnings: Why Do Doing Words Good Hurt You’re Wages? Presented: Montreal, Society of Labor Economics World Meeting, June 2015. Also: http://www.sole-jole.org/15504.pdf Cohort(s): NLSY79 Publisher: Society of Labor Economists (SOLE) Keyword(s): Armed Services Vocational Aptitude Battery (ASVAB); Earnings; Wage Penalty/Career Penalty; Wage Theory Permission to reprint the abstract has not been received from the publisher. In a reading comprehension test administered to American youth in 1980 by the National Longitudinal Survey, a one standard deviation increase in reading scores is associated with a 1.5% decrease in later wages after conditioning on the youths' other scores on math, science, and personality tests. This goal of this paper is to explain this negative conditional relationship between the reading test score and wages, which I call the reading penalty. In the first section of the paper, I consider and reject a number of statistical objections to the existence of the reading penalty. In the second section, I construct a simple generalized Roy model that offers two distinct economic explanations for the reading penalty. The first explanation is the starving artist, where reading skills are a proxy for preferences for low-wage jobs, while the second is the bad sign, where high reading test scores proxy for a lack of other productive attributes. In the final section, I use the NLSY data and the identification from the model to determine which economic explanation of the reading penalty is most plausible. I find weak support for the starving artist hypothesis. On the other hand, I find evidence in favor of the bad sign explanation: higher reading comprehension scores may signal a lack of organizational skills. |
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Bibliography Citation
Sanders, Carl. "Reading Skills and Earnings: Why Do Doing Words Good Hurt You’re Wages?" Presented: Montreal, Society of Labor Economics World Meeting, June 2015. |