Maintaining (Locus of) Control? Assessing the Impact of Locus of Control on Education Decisions and Wages

52 Pages Posted: 1 Nov 2010

See all articles by Remi Piatek

Remi Piatek

University of Chicago

Pia R. Pinger

University of Bonn

Multiple version iconThere are 3 versions of this paper

Abstract

This paper demonstrates that locus of control, i.e. whether individuals believe that reinforcement in life comes from their own actions instead of being determined by luck or destiny, is an important predictor of the decision to obtain higher education. Furthermore, the authors find that premarket locus of control, defined as locus of control measured at the time of schooling ­ before the individual enters the labor market ­ does not significantly affect later wages after controlling for education decisions. In light of the existing literature, which finds mostly positive effects of contemporaneous locus of control measures on wages, this indicates that it is important to distinguish between premarket skills and those that are already influenced by labor market experience and age. Last, simulation of the model shows that moving individuals from the first to the last decile of the locus of control distribution significantly shifts the distribution of schooling choices, thus indirectly affecting later wages. The paper conveys important policy implications. If some personality traits, such as locus of control, influence the cost of education but not outcomes directly, these individual characteristics may keep individuals from studying who, once they reach the labor market, are no less successful than other individuals. If these individuals are at high risk of dropping out of school, early personality tests and targeted mentoring of students with an external locus of control are a means to countervail skill shortages in society.

Keywords: locus of control, wages, latent factor model, data set combination

JEL Classification: C31, J24, J31

Suggested Citation

Piatek, Rémi and Pinger, Pia R., Maintaining (Locus of) Control? Assessing the Impact of Locus of Control on Education Decisions and Wages. IZA Discussion Paper No. 5289, Available at SSRN: https://ssrn.com/abstract=1700458

Rémi Piatek (Contact Author)

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Pia R. Pinger

University of Bonn ( email )

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