Willingness to Compete and Work Incentives

This paper studies the relationship between non-cognitive ability and productivity through analyzing the influence of workers' willingness to compete on their annual income and work motivation. Willingness to compete is important, like other non-cognitive abilities, in the sense that it can affect lifetime income through job selection. Willingness to compete can be determined not only by inherent factors, but also by the growing environment, especially by an exogenous economic shock such as the recession of the country in adolescence. Utilizing the fact that an adolescent experience of exogenous economic recession makes people avoid competition, this paper examines the effect of willingness to compete on work performance in Japan, by instrumental variable estimation with the timing of recession as an instrument for willingness to compete. After we confirmed that the willingness to compete is discouraged when experiencing recession in adolescence, we show that willingness to compete increases work incentives among Japanese workers. That is, those who faced recession unfortunately during the adolescence become less motivated to work after avoiding competition in their work places.