Authors
Summary
We study how observed individual characteristics affect earnings of individuals. The characteristics we study are individual personality traits (including cognitive ability) and family background. We make use of data providing information on the individual characteristics rather than estimating them as latent variables. Their contribution may be indirect (facilitating the acquisition of education) or direct (perhaps affecting productivity). We estimate the fraction of these two contributions through regression analysis and structural model, and find that the contribution of both pathways is signifcant. These characteristics may be in part determined endogenously. To estimate the proportion due to original individual characteristics we use measures provided by Polygenic Scores for education years and fluid intelligence. The marginal effects of these scores is signifcant and high. The indirect contribution (operating though acquisition of college) is around one third of the total effect.