Having a team with diverse training, cognitive endowments, etc., maximizes both the variety of ideas the team can produce, and the likelihood that the team will be able to see value in unexpected forms.
To facilitate an interpretation of the results, variables contributing to the academic achievement of students are separated into four groups: (1) their characteristics, (2) their families' characteristics, (3) their initial cognitive skill endowments, and (4) other factors.
The aggregate decomposition results (either at means or along the distribution) additionally suggest a decreasing role of the characteristic effect in contributing to the total gap as students advance to higher grades.19 This is consistent with the declining contribution of initial cognitive skill endowments to the total characteristic effect as students progress through school.20.20
However, significant gender differences in terms of initial cognitive and health endowments are noticed.
While the value-added estimates are the focus of this analysis, Fig. 1 also reports gender test score gap estimates (the thick dotted brown line) for comparison purposes and their corresponding 95% confidence intervals (the thin dotted brown line) obtained using regression model 2, which does not include initial endowment in cognitive skills.
It is patrimony of all living agents, casually or intentionally activated in certain situations, challenging the old conception of creativity as exceptional endowment of talented cognitive agents (Bink and Marsh 2000; Ward et al. 1997; Weisberg 1993).
Solely the differences in the average of the components of human capital endowment (education, experience and cognitive ability) explain the wage gap in the formal sector.
Subsequently, Oaxaca-Blinder decomposition results show that in both formal and informal sectors, the rural urban wage differential is explained by differences in levels of human capital endowment; education, experience and cognitive ability.
Our cognitive capacities and faculties are part of the natural endowment we owe to biological evolution.
Applying Blinder-Oaxaca decomposition techniques and correcting for potential selection bias from sorting into the formal sector, i.e. registered employment, this study demonstrates that in the informal sector the differences in returns to components of human capital endowment, such as work experience, education and cognitive ability, explain large parts of the rural urban wage gap.
