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Personality and Life-Cycle Labour Earnings

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  • Teresa Backhaus

  • Mattis Beckmannshagen

Abstract

Labour market inequality over the life cycle reflects differences not only in wages, but also in employment stability, and career progression. While a large liter ature documents that personality traits predict wages and other labour market out comes, little is known about how they shape accumulated earnings over the working life. This paper studies the relationship between personality traits, risk preferences, locus of control, and accumulated labour earnings up to age 45. We combine German administrative social-security records with long-running survey data, allowing us to link complete employment and earnings biographies to established measures of personality. We show that personality traits are strongly associated with long-run earnings, but through different mechanisms. Conscientiousness and an internal locus of con trol are positively related to accumulated earnings, whereas agreeableness, neuroticism, and, particularly for women, extraversion are negatively associated with earnings accumulation. Decomposing accumulated earnings into wage and employ ment components reveals substantial heterogeneity in the channels through which personality shapes long-run outcomes. The results highlight that the role of person ality for economic success cannot be fully understood from cross-sectional wage measures alone.

Suggested Citation

  • Teresa Backhaus & Mattis Beckmannshagen, 2026. "Personality and Life-Cycle Labour Earnings," CRC TR 224 Discussion Paper Series crctr224_2025_752, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2025_752
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    Keywords

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    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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