of as the additional earnings that each additional unit of height generates.
3
There are mainly two sorts of mechanisms that would generate such returns. First, the height
premium may result from preferential treatment of tall people. In this case, the returns to height refl ect a taste for stature per se on the labor market. Second, the returns may
result from any positive effect height brings on productivity, for instance through its effect on the formation of noncognitive skills. Here, it is not height per se that is val-
ued on the labor market but rather the skills that result from greater height.
In order to empirically investigate the returns to height, the previous literature has adopted empirical specifi cations of the type:
2 y
i
= α + βh
i
+ X
i
γ + ε
i
where X
i
denotes a vector of all relevant control and mediating variables and γ denotes
the corresponding regression coeffi cients. Given that no mediating factors are included in
X
i
and under the assumption that Covh
i
, ε
i
= 0, β would measure the causal return
to height. To the extent that the returns to height refl ect the impact of height on productivity- enhancing factors, including these mediating factors in X would reduce
the magnitude of β. What remains of β then capture the returns to height as measured
through preferential or discriminatory treatment. As discussed in the introduction, Persico, Postlewaite, and Silverman 2004 argued
that noncognitive skills are mediating factors in the relationship between height and earnings. Case and Paxson 2008a instead argued that the height coeffi cient picks up
that tall people earn more because of their greater cognitive skills. If this latter argu- ment is valid, a simple regression of earnings on height would suffer from a standard
omitted variables problem, where the estimated
β would be biased upward due to the omission of cognitive skills in the regression.
Our discussion so far thus shows that there is a sharp distinction between the two hypotheses when it comes to the underlying mechanisms at work. In the following
three sections we deepen our discussion on the role of cognitive, noncognitive skill and muscular strength for the height- earnings association in order to clarify our choice
of empirical strategy.
A. Cognitive Skills
A positive association between height and cognitive ability, throughout the human life- span from early childhood to old age, has been documented in numerous studies. See,
for example, Richards et al. 2002; Case and Paxson 2008a, 2008b. This association was exploited by Case and Paxson 2008a and formed the basis for their argument that
the association between height and earnings largely refl ects the fact that taller people on average have greater cognitive abilities.
4
The authors also provide a survey of some of the potential explanations for the positive association between height and cognitive abil-
ity. Summarizing, it is postulated that certain growth factors are related to both height and cognitive ability, although there is still substantial uncertainty regarding the exact
3. Note that the concept of the “height premium” refers to an individual and not a population return. That is, we study the effect of a single person being taller but the population distribution staying the same rather
than a cohort getting taller. 4. The importance of cognitive skills for successful labor market outcomes is well established. See for ex-
ample Cawley, Heckman, and Vytlacil 2001.
underlying mechanisms. For instance, insulin- like growth factors are believed to infl u- ence body growth at the same time as infl uencing neural growth. It is also assumed that
environmental factors, such as maternal smoking during pregnancy, may also explain part of the association between height and cognition. In comparing twins, Black, Dev-
ereux, and Salvanes 2007 found a connection between birthweight on the one hand, and IQ test scores and height in late adolescence on the other, again underscoring the
importance of the intrauterine environment for adult height as well as cognitive ability.
Based on the basic presumption that an individual’s endowment affects both cogni- tive and height development, Case and Paxson 2008a postulate that cognitive ability
and the onset of the growth spurt in adolescence should be correlated, which is indeed what they fi nd in their data.
5
For boys, cognitive test scores at age 11 are positively associated with height gain in the subsequent fi ve years and negatively associated with
height gain from age 16 onwards. Though boys entering their growth spurt late may catch up in height, they will still lag behind cognitively as the relative position, when
it comes to intelligence, is rather fi rmly established early in life. This fact may explain why height in adolescence is a stronger predictor of adult earnings than adult height.
Hence, the association between height and cognition has primarily been attributed to common underlying factors, and not to any causal relation between the two. From
this respect, cognitive ability should be regarded as a control variable when estimating the height premium.
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B. Noncognitive Skills
