Leadership Skills and Wages

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Abstract
American business is devoting a significant and increasing amount of resources to identifying and developing a worker characteristic called "leadership skill". Is there such a thing, and is it rewarded in labor markets? Using the Project Talent, NLS72 and High School and Beyond datasets, we show that men who occupied leadership positions in high school earn more as adults, even when cognitive skills are held constant. The pure leadership-wage effect varies, depending on definitions and time period, from four percent to thirty-three percent. According to our estimates, this effect is not an artifact of measurement error in cognitive skills or differences in a wide array of other physical or psychological traits. High-school leaders are more likely to occupy managerial occupations as adults, and leadership skills command a higher wage premium within managerial occupations than in other jobs. Finally, we find some evidence that, rather than being completely determined before high school entry, leadership skills may be fostered by exposure to leadership opportunities during high school.