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Involuntary Job Loss and Changes in Personality Traits

Author

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  • Anger, Silke

    () (Institute for Employment Research (IAB), Nuremberg)

  • Camehl, Georg

    () (DIW Berlin)

  • Peter, Frauke

    () (DIW Berlin)

Abstract

Economists consider personality traits to be stable, particularly throughout adulthood. However, evidence from psychological studies suggests that the stability assumption may not always be valid, as personality traits can respond to certain life events. Our paper analyzes whether and to what extent personality traits are malleable over a time span of eight years for a sample of working individuals. Furthermore, we specifically look at changes in personality traits after a major adverse life event: involuntary job loss. We use data from the German Socio-Economic Panel Study (SOEP) from 2004 to 2014 – a period over which individuals' Big Five personality inventory was measured three times. Our dataset allows us to exploit detailed employment information, particularly reasons for job termination and unemployment spells. We focus solely on plant closures as a reason for job termination. Job loss due to plant closure is widely used as a relatively exogenous event to identify causal effects. Our results suggest that personality traits are indeed malleable during adulthood. Although the Big Five measures are relatively stable within the overall population of workers, we find an increase in openness, that is, the willingness to seek new experiences, for the average displaced worker. This increase, however, is fully driven by individuals with high educational attainment and by those who find a new job immediately after dismissal. The other dimensions of the Big Five personality inventory remain nearly unchanged after an involuntary job loss. Our findings hold for a number of robustness checks and are supported by the results of a falsification test using a placebo treatment.

Suggested Citation

  • Anger, Silke & Camehl, Georg & Peter, Frauke, 2017. "Involuntary Job Loss and Changes in Personality Traits," IZA Discussion Papers 10561, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp10561
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    References listed on IDEAS

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    Cited by:

    1. Malte Preuss & Juliane Hennecke, 2017. "Biased by Success and Failure: How Unemployment Shapes Stated Locus of Control," SOEPpapers on Multidisciplinary Panel Data Research 943, DIW Berlin, The German Socio-Economic Panel (SOEP).
    2. Golsteyn, Bart H. H. & Schildberg-Hörisch, Hannah, 2017. "Challenges in research on preferences and personality traits: Measurement, stability, and inference," DICE Discussion Papers 263, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    3. Alexander Mosthaf, 2017. "Change in self-efficacy as a source of state dependence in labor market dynamics?," Working Papers 1715, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz.

    More about this item

    Keywords

    involuntary job loss; personality traits; matching;

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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