Two Economists' Musings on the Stability of Locus of Control

46 Pages Posted: 18 Apr 2011

See all articles by Deborah A. Cobb-Clark

Deborah A. Cobb-Clark

School of Economics, University of Sydney; IZA Institute of Labor Economics

Stefanie Schurer

Victoria University of Wellington - School of Economics and Finance

Abstract

Empirical studies of the role of non-cognitive skills in driving economic behavior often rely heavily on the assumption that these skills are stable over the relevant time frame. We analyze the change in a specific non-cognitive skill, i.e. locus of control, in order to directly assess the validity of this assumption. We find that short- and medium-run changes in locus of control are rather modest on average, are concentrated among the young or very old, do not appear to be related to the demographic, labor market, and health events that individuals experience, and are unlikely to be economically meaningful. Still, there is no evidence that locus of control is truly time-invariant implying that the use of lagged measures results in an errors-in-variables problem that could downward bias the estimated wage return to locus of control by as much as 50 percent. Those researchers wishing to analyze the economic consequences of non-cognitive skills should consider (i) restricting their analysis to the working-age population for whom there is little evidence of systematic change in skill levels and (ii) accounting for error in the skill measures they employ.

Keywords: non-cognitive skills, locus of control, stability, measurement error, endogeneity, life events

JEL Classification: J24, C18

Suggested Citation

Cobb-Clark, Deborah A. and Schurer, Stefanie, Two Economists' Musings on the Stability of Locus of Control. IZA Discussion Paper No. 5630. Available at SSRN: https://ssrn.com/abstract=1812475

Deborah A. Cobb-Clark (Contact Author)

School of Economics, University of Sydney ( email )

606 Social Sciences Bldg. (A02)
The University of Sydney
Sydney, NSW 2006
Australia
61435061387 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Stefanie Schurer

Victoria University of Wellington - School of Economics and Finance ( email )

P.O. Box 600
Wellington 6001
New Zealand
+64-4-4636708 (Phone)

HOME PAGE: http://www.victoria.ac.nz/sef/staff/stefanie-schurer.aspx

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