This raises a further econometric issue: Assuming that cognitive and noncognitive skills continue to develop beyond adolescence and depend on accumulated work and life experience, then equation [2] is subject to simultaneous equations bias, i.e., earnings and employment depend on skills, and skills also depend on a person’s work experience.<sup>21</sup> The implicit assumption in using cross-section data as we do is that some skills are relatively unchanged over the work life, or that a permanent component of skills developed early in life dominates later development and is a good enough measure of current skills.<sup>22</sup> As discussed in the previous section, this potential source of simultaneity bias implies that noncognitive skills acquired in childhood and adolescence determine adults’ earnings and employment also through their impact on academic performance.<sup>23,24</sup> As we do not have earlier 21 Using data on skills at a young age may minimize the problem of reverse causation, of work experience itself contributing to the formation of observed cognitive or noncognitive skills, but studies have also found that some noncognitive skills continue to develop throughout the life cycle. Several studies on advanced countries—for example, Heckman, Stixrud and Urzua (2006), Fortin (2008), Hall and Farkas (2011), and Mueller and Plug (2006) for the U.S., Braakmann (2010) for Germany, and Viinikainen et al. (2014) for Finland—use data on cognitive and/or noncognitive skills that were collected at an earlier time than when earnings were observed (e.g., end of high school or at labor market entry). Keeping in mind that individual noncognitive skills are correlated and that there may indeed be an ordering of skills, we conducted an exploratory principal components analysis to draw out this ordering. However, our results indicated the variables of nine distinct noncognitive skills were characterized more by “uniqueness” rather than being correlated.

22 While there is evidence that people do change, there is also evidence that personality traits are relatively stable among adults. In a meta-analysis of longitudinal studies, Roberts, Walton and Viechtbauer (2006) examine cumulative lifetime change in the components of the Five-Factor Model, disaggregating the five components into social dominance (assertiveness, dominance) and social vitality (talkativeness, gregariousness, and sociability), and find that people become more socially dominant, conscientious, and emotionally stable as they age, whereas social vitality and openness to experience increase early in life and then fall in old age. In contrast, according to Blonigen et al. (2006) and Roberts and Del Vecchio (2000), personality traits appear to be well-established by the mid- to late-30s and remain relatively stable among adults. Exceptions may occur if there is a sufficiently large or permanent change in one’s circumstances (Borghans et al., 2008). Our analysis includes only adults aged 25 and over, so it is reasonable to assume that their personality traits are already established. Linz and Semykina (2009) use this same reason, plus the fact that they exclude those adversely affected by the changes in the former socialist republics in Europe in their analysis to argue that it is possible to examine the general association between personality and performance using cross-section, rather than longitudinal, data.

23 Several studies also show that early noncognitive skills can influence schooling attainment and cognitive skills (for example, Heckman, Stixrud and Urzua, 2006; Borghans et al., 2008; Almlund et al., 2011; Behncke, 2012).

24 These might differ by gender; for example, the frequency with which boys argue, fight, or act impulsively has been shown to affect their early school performance, with consequences for their academic success (Goldin, Katz, and 14