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Estimating the Effect of Personality on Male-Female Earnings

  • Mueller, Gerrit


    (ZEW Mannheim)

  • Plug, Erik


    (University of Amsterdam)

This paper uses the Five-Factor Model of personality structure as an organizing framework to explore the effects of personality on earnings. Using data from a longitudinal survey of American high school graduates, we find that extroversion, agreeableness, conscientiousness, neuroticism and openness to experience are rewarded/penalized significantly and differentially across genders. Antagonistic, emotionally stable and open men enjoy substantial earnings advantages over otherwise similar individuals. In case of women, the labor market appears to value conscientiousness and openness to experience. The positive returns to openness are very similar across genders, suggesting that being creative, unconventional and artistic is equally important for men and women working in all types of occupations. Moreover, we find significant gender differences in personality characteristics. Decomposition of personality-based earnings differentials into trait and parameter effects suggests that gender-atypical traits reduce the earnings advantage that individuals would otherwise enjoy under their own-sex wage structure. Overall, we find that the impact of personality on earnings is significant but not large – not trivial either – and comparable to the impact of differences in cognitive ability.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1254.

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Length: 41 pages
Date of creation: Aug 2004
Date of revision:
Publication status: published in: Industrial and Labor Relations Review, 2006, 60 (1), 3-22
Handle: RePEc:iza:izadps:dp1254
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  1. Ronald Oaxaca, 1971. "Male-Female Wage Differentials in Urban Labor Markets," Working Papers 396, Princeton University, Department of Economics, Industrial Relations Section..
  2. Paula England, 1982. "The Failure of Human Capital Theory to Explain Occupational Sex Segregation," Journal of Human Resources, University of Wisconsin Press, vol. 17(3), pages 358-370.
  3. Randall K. Filer, 1986. "The role of personality and tastes in determining occupational structure," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 39(3), pages 412-424, April.
  4. Goldsmith, Arthur H & Veum, Jonathan R & Darity, William, Jr, 1997. "The Impact of Psychological and Human Capital on Wages," Economic Inquiry, Western Economic Association International, vol. 35(4), pages 815-29, October.
  5. Muriel Niederle & Lise Vesterlund, 2005. "Do Women Shy Away From Competition? Do Men Compete Too Much?," NBER Working Papers 11474, National Bureau of Economic Research, Inc.
  6. Yona Rubinstein & James J. Heckman, 2001. "The Importance of Noncognitive Skills: Lessons from the GED Testing Program," American Economic Review, American Economic Association, vol. 91(2), pages 145-149, May.
  7. Murnane, Richard J & Willett, John B & Levy, Frank, 1995. "The Growing Importance of Cognitive Skills in Wage Determination," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 251-66, May.
  8. Gary S. Becker, 1975. "Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, Second Edition," NBER Books, National Bureau of Economic Research, Inc, number beck75-1, July.
  9. Greg J. Duncan & Rachel Dunifon & Jeanne Brooks-Gunn, 2001. "As Ye Sweep, So Shall Ye Reap," American Economic Review, American Economic Association, vol. 91(2), pages 150-154, May.
  10. Melissa Osborne & Herbert Gintis & Samuel Bowles, 2001. "The Determinants of Earnings: A Behavioral Approach," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1137-1176, December.
  11. Griliches, Zvi & Mason, William M, 1972. "Education, Income, and Ability," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages S74-S103, Part II, .
  12. Lee Cronbach, 1951. "Coefficient alpha and the internal structure of tests," Psychometrika, Springer, vol. 16(3), pages 297-334, September.
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