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 find that basic cognitive skills, particularly mathematics, have a larger impact on wages for 24-year-old men and women in 1986 compared to 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 the impact of high school seniors' mastery of basic cognitive skills on wages is much smaller two years after graduation than six years after graduation. The findings suggest that the rising demand for basic cognitive skills is a significant factor in the 30% increase in within-group wage variation since 1970. The authors conclude that the increased role of cognitive skills is not limited to a small set of best-practice firms but is a general trend that can be observed in national random samples.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 find that basic cognitive skills, particularly mathematics, have a larger impact on wages for 24-year-old men and women in 1986 compared to 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 the impact of high school seniors' mastery of basic cognitive skills on wages is much smaller two years after graduation than six years after graduation. The findings suggest that the rising demand for basic cognitive skills is a significant factor in the 30% increase in within-group wage variation since 1970. The authors conclude that the increased role of cognitive skills is not limited to a small set of best-practice firms but is a general trend that can be observed in national random samples.