“IQ in the Ramsey Model: A Naïve Calibration”, 2006 (; backlinks; similar):
I show that in a conventional Ramsey model, between one-fourth and one-half of the global income distribution can be explained by a single factor: The effect of large, persistent differences in national average IQ on the private marginal product of labor.
Thus, differences in national average IQ may be a driving force behind global income inequality. These persistent differences in cognitive ability—which are well-supported in the psychology literature—are likely to be somewhat malleable through better health care, better education, and especially better nutrition in the world’s poorest countries.
A simple calibration exercise in the spirit of 2000 and 2005 is conducted.
I show that an IQ-augmented Ramsey model can explain more than half of the empirical relationship between national average IQ and GDP per worker. I provide evidence that little of the IQ-productivity relationship is likely to be due to reverse causality.