A dynamic analysis of the effects of intelligence and socioeconomic background on job-market success

We compare the effects of socioeconomic background (SEB) and intelligence on wage trajectories in a dynamic growth modeling framework in a sample that had completed just 12 years of education. I show that the main difference between the two is that SEB affected wages solely by its effect on entry pay whereas intelligence affected wages primarily by its effect on mobility. I argue that a major issue that has been at the center of the debate about the roles of intelligence and SEB in social success — the difficulty in accurately measuring SEB — is to a large extent resolved by these results.

► We examine the effect of socio-economic background and General Mental Ability on pay.
► Education is controlled for by using a sample of high school graduates.
► GMA affects both entry-pay and mobility in pay.
► Socioeconomic background affects only entry-pay.
► The results hold both for a narrow and an extended index of socioeconomic background.