This paper examines the growing importance of cognitive skills in wage determination. Using data from two longitudinal surveys of American high school seniors, the authors show that basic cognitive skills had a larger impact on wages for 24-year-old men and women in 1986 than in 1978. For women, the increase in the return to cognitive skills between 1978 and 1986 accounts for all of the increase in the wage premium associated with post-secondary education. The study also shows that high school seniors' mastery of basic cognitive skills had a much smaller impact on wages two years after graduation than on wages six years after graduation. The authors analyze data from two nationally representative databases that contain information on the labor market performance of students who graduated from high school in one of the last two decades. The National Longitudinal Study of the High School Class of 1972 (NLS72) provides information on the labor market experiences of 22,652 students who were first surveyed in 1972, when they were seniors in high school. High School and Beyond (HS&B) provides information on the labor market experiences of 11,500 students first surveyed as high school seniors in 1980. The study finds that the wage premium associated with post-secondary education increased significantly for both men and women between 1978 and 1986. For men, the average wage for 24-year-old college graduates was only one percent lower in 1986 than in 1978. For women, the average wage for 24-year-old college graduates was one percent higher in 1986 than in 1978. The study also finds that the wage premium for college graduates relative to high school graduates increased significantly during the 1980s. The authors conclude that the growing importance of cognitive skills in wage determination is due to changes in the demand for skills within occupational groups. The study shows that the wage premium for college graduates relative to high school graduates increased significantly during the 1980s. The authors also find that the wage premium for college graduates relative to high school graduates is higher for men than for women. The study suggests that the increasing demand for cognitive skills is part of the explanation for the 30 percent increase since 1970 in within-group wage variation.This paper examines the growing importance of cognitive skills in wage determination. Using data from two longitudinal surveys of American high school seniors, the authors show that basic cognitive skills had a larger impact on wages for 24-year-old men and women in 1986 than in 1978. For women, the increase in the return to cognitive skills between 1978 and 1986 accounts for all of the increase in the wage premium associated with post-secondary education. The study also shows that high school seniors' mastery of basic cognitive skills had a much smaller impact on wages two years after graduation than on wages six years after graduation. The authors analyze data from two nationally representative databases that contain information on the labor market performance of students who graduated from high school in one of the last two decades. The National Longitudinal Study of the High School Class of 1972 (NLS72) provides information on the labor market experiences of 22,652 students who were first surveyed in 1972, when they were seniors in high school. High School and Beyond (HS&B) provides information on the labor market experiences of 11,500 students first surveyed as high school seniors in 1980. The study finds that the wage premium associated with post-secondary education increased significantly for both men and women between 1978 and 1986. For men, the average wage for 24-year-old college graduates was only one percent lower in 1986 than in 1978. For women, the average wage for 24-year-old college graduates was one percent higher in 1986 than in 1978. The study also finds that the wage premium for college graduates relative to high school graduates increased significantly during the 1980s. The authors conclude that the growing importance of cognitive skills in wage determination is due to changes in the demand for skills within occupational groups. The study shows that the wage premium for college graduates relative to high school graduates increased significantly during the 1980s. The authors also find that the wage premium for college graduates relative to high school graduates is higher for men than for women. The study suggests that the increasing demand for cognitive skills is part of the explanation for the 30 percent increase since 1970 in within-group wage variation.