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Personality and Earnings

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  • Kaye K. W. Lee

Abstract

This paper studies personality as a potential explanation for wage differentials between apparently similar workers. This follows initial studies by Jencks (1979) that suggest that certain personality traits, such as industriousness and leadership, have an impact on earnings. The paper aims to provide a theoretical framework within which these effects may be analyzed. The study begins by outlining four issues as a backdrop to the model: rationality, the industry, firms, and workers. A crucial factor to the model is the memeÑa mental gene that affects personality. Taking these four factors into consideration, the Contested Exchange model from Bowles and Gintis (1990) is used. Then, it is adapted to study memetic effects on the wage rate. This is followed by an analysis of how memes may affect personality and thus earnings. The issues that require further study and resolution are 1) which traits create wage differentials, and 2) two-way causality: does personality affect the wage, or does a wage premium become an incentive for a person to adopt new memes?

Suggested Citation

  • Kaye K. W. Lee, 2006. "Personality and Earnings," Economics Working Paper Archive wp_443, Levy Economics Institute.
  • Handle: RePEc:lev:wrkpap:wp_443
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    References listed on IDEAS

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    1. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, Oxford University Press, vol. 69(1), pages 99-118.
    2. Cecilia Chaing & Lindsay McSweeney, 2010. "A Behavioral Model of Rational Choice," CPI Journal, Competition Policy International.
    3. Markus Jäntti & Eva Österbacka & Oddbjörn Raaum & Tor Eriksson & Anders Björklund, 2002. "Brother correlations in earnings in Denmark, Finland, Norway and Sweden compared to the United States," Journal of Population Economics, Springer;European Society for Population Economics, pages 757-772.
    4. Lerner, Abba P, 1972. "The Economics and Politics of Consumer Sovereignty," American Economic Review, American Economic Association, pages 258-266.
    5. Markus Jäntti & Eva Österbacka & Oddbjörn Raaum & Tor Eriksson & Anders Björklund, 2002. "Brother correlations in earnings in Denmark, Finland, Norway and Sweden compared to the United States," Journal of Population Economics, Springer;European Society for Population Economics, pages 757-772.
    6. Samuel Bowles & Herbert Gintis & Melissa Osborne, 2001. "Incentive-Enhancing Preferences: Personality, Behavior and Earnings," Working Papers 01-01-004, Santa Fe Institute.
    7. Alan B. Krueger & Lawrence H. Summers, 1986. "Reflections on the Inter-Industry Wage Structure," NBER Working Papers 1968, National Bureau of Economic Research, Inc.
    8. Herbert Gintis & Samuel Bowles & Melissa Osborne, 2001. "Incentive-Enhancing Preferences: Personality, Behavior, and Earnings," American Economic Review, American Economic Association, pages 155-158.
    9. Kathleen R. Conner & C. K. Prahalad, 1996. "A Resource-Based Theory of the Firm: Knowledge Versus Opportunism," Organization Science, INFORMS, vol. 7(5), pages 477-501, October.
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