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Is personality related to permanent earnings? Evidence using a twin design

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  • Maczulskij, Terhi
  • Viinikainen, Jutta

Abstract

Using twin survey combined with register-based panel data on labor market outcomes, the authors examine the association between personality characteristics and long-term earnings among prime working-age individuals. The long-term earnings were measured over the 1990–2008 period. The sample contains 4,642 twin pairs, of which 53% are females. In contrast to previous studies, this paper uses the within-twin dimension of the data to control for shared family background and confounding genetic factors. The results suggest that unobserved genetic differences may introduce omitted variable bias in standard ordinary least square results. After controlling for shared environment and genetic background, the authors find that a facet of extraversion (activity) is related to higher (β = 0.046), and neuroticism is related to lower (β = -0.060) permanent earnings in the labor market. The lower earnings of more neurotic individuals are likely explained by the weaker attachment in the labor market.

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  • Maczulskij, Terhi & Viinikainen, Jutta, 2018. "Is personality related to permanent earnings? Evidence using a twin design," Journal of Economic Psychology, Elsevier, vol. 64(C), pages 116-129.
    • Handle: RePEc:eee:joepsy:v:64:y:2018:i:c:p:116-129
    DOI: 10.1016/j.joep.2018.01.001
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    Cited by:

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    3. Mihails Hazans & Jaan Masso & Per Botolf Maurseth, 2023. "Human values and selection into supervisory positions: Evidence from nine European countries," EGEIWP 01-2023, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Dec 2023.
    4. Josten, Cecily & Lordan, Grace, 2024. "Who makes it to the top? Differential rewards to personality across gender and occupation in the UK," LSE Research Online Documents on Economics 121448, London School of Economics and Political Science, LSE Library.
    5. Rohde, Nicholas & Trivedi, Pravin & Tang, K.K. & Rao, Prasada, 2023. "Cognitive and non-cognitive traits and the intergenerational transmission of socioeconomic inequality," Journal of Economic Psychology, Elsevier, vol. 97(C).
    6. Maczulskij, Terhi & Viinikainen, Jutta, 2021. "Personality and Public Sector Employment," ETLA Working Papers 86, The Research Institute of the Finnish Economy.
    7. Brenčič, Vera & McGee, Andrew, 2023. "Demand for Personality Traits, Tasks, and Sorting," IZA Discussion Papers 16576, Institute of Labor Economics (IZA).
    8. Linda Kamas & Anne Preston, 2020. "Does Empathy Pay? Evidence on Empathy and Salaries of Recent College Graduates," Journal of Labor Research, Springer, vol. 41(1), pages 169-188, June.
    9. Gavoille, Nicolas & Hazans, Mihails, 2022. "Personality Traits, Remote Work and Productivity," IZA Discussion Papers 15486, Institute of Labor Economics (IZA).
    10. Justine Herve & Helene Purcell & Subha Mani, 2023. "Conscientiousness Matters: How does Personality affect Labor Market Outcomes?," Fordham Economics Discussion Paper Series dp2023-05er:dp2023-05, Fordham University, Department of Economics.

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    More about this item

    Keywords

    Personality; Earnings; Labor market outcomes; Unobserved heterogeneity; Twin studies;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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