We show that a country’s average IQ score is a useful predictor of the wages that immigrants from that country earn in the U.S., whether or not one adjusts for immigrant education. Just as in numerous microeconomic studies, 1 IQ point predicts 1% higher wages, suggesting that IQ tests capture an important difference in cross-country worker productivity. In a cross-country development accounting exercise, about one-sixth of the global inequality in log income can be explained by the effect of large, persistent differences in national average IQ on the private marginal product of labor. Taken together with the results of Jones and Schneider (2006) and Hanushek and Kimko (2000), this suggests that cognitive skills matter more for groups than for individuals.
“IQ in the Production Function: Evidence from Immigrant Earnings”, Jones & Schneider 2008: