Nevertheless, the relative magnitudes of the OLS and the IV training coefficients provide information that enables us to correct for measurement error bias without any need for external information on misclassification rates. While instrumental variables estimation is the standard method of correcting for measurement error, instrumental variables estimates are not consistent when the explanatory variable measured with error (in our case, training) can only take on a limited range of values. To eliminate the bias from belated information, we estimate a fixed effects wage equation with a two-stage procedure that uses previous training and fixed individual and match-specific variables as instruments. Using data from the National Longitudinal Survey of Youth, we find that training in the later years of tenure is the norm rather than the exception. literature has thus far either implicitly or explicitly assumed that training is concentrated at the beginning of the employment relationship. Therefore, an implicit assumption in the human capital model is that training must be occurring throughout a worker's stay at an employer. The human capital model attributes rising wage-tenure and wage-experience profiles to investments in worker productivity. The increasing and concave age earnings profile is one of the most commonly accepted facts in economics. Despite uncertainty and the exclusion of non-market productivity, incorporation of such estimates could lead to a fuller assessment of the benefits of public health and clinical interventions that protect the developing brains of fetuses, infants, and young children.
Using that estimate and the present value of lifetime earnings calculated using a 3% discount rate, the implied lifetime monetary valuation of an IQ point in the United States is USD 10,600–13,100. We take a conservative published estimate of a 1.4% difference in market productivity per IQ point in the United States from a recent study that controlled for confounding by family background and behavioral attributes. That range reflects differences in data sources and analytic methods. Estimates of the association of adult earnings with cognitive ability assessed in childhood or adolescence vary from 0.5% to 2.5% per IQ point. This review summarizes estimates from high-income countries of the association of general cognitive ability, standardized as intelligence quotient (IQ), with annual and lifetime earnings among adults. Expected gains in economic output from interventions that protect cognitive function can be incorporated in benefit–cost and cost-effectiveness analyses conducted from a societal perspective. Cognitive ability in childhood is positively associated with economic productivity in adulthood.
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