Noncognitive Skills and the Racial Wage Gap

Charles Hokayem, U.S. Census Bureau

This paper explores the role of noncognitive skills, or "soft skills", in explaining racial gaps in wages. Noncognitive skills describe a person’s self-perception, work ethic, and overall outlook on life. These skills have been linked to a variety of outcomes such as educational attainment, earnings, and work habits in the general population. Less well understood is the impact of these skills on subgroups of the general population. This paper adds two noncognitive skills, locus of control and self-esteem, to a simple wage specification to determine the effect of noncognitive skills on the racial wage gap (white, black, and Hispanic) and the return to noncognitive skills across the wage distribution. The wage specifications are estimated using a pooled estimator, a between estimator, and a quantile estimator. Results using the National Longitudinal Survey of Youth 1979 (NLSY79) show they account for differing portions of the racial wage gap depending on race and gender.