Locus of Control and Low-Wage Mobility

32 Pages Posted: 12 Oct 2013

See all articles by Daniel Schnitzlein

Daniel Schnitzlein

German Institute for Economic Research (DIW Berlin); University of Hamburg

Jens Stephani

Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

Date Written: September 2013

Abstract

We investigate whether non-cognitive skills – in particular Locus of Control – are important determinants of the labour market processes at the low-wage margin. Based on data from the German Socio-Economic Panel, we estimate dynamic multinomial logit models with random effects and investigate whether Locus of Control influences the probability of being higher-paid or low-paid as well as the probability of escaping low wages by moving up to higher-paid employment. Our results reveal a significant amount of state dependence in low pay even after controlling for Locus of Control and other non-cognitive skills. Furthermore, compared to individuals with an external Locus of Control, individuals with a more internal Locus of Control have a significantly higher probability of being higher-paid instead of low-paid. Conditional on being low-paid, individuals with an internal Locus of Control additionally have a significantly higher probability of moving to higher-paid employment in the following year than individuals with an external Locus of Control.

Keywords: low-wage, wage mobility, personality, non-cognitive skills, inequality, SOEP

JEL Classification: J30, J60

Suggested Citation

Schnitzlein, Daniel and Stephani, Jens, Locus of Control and Low-Wage Mobility (September 2013). SOEPpaper No. 589, Available at SSRN: https://ssrn.com/abstract=2338441 or http://dx.doi.org/10.2139/ssrn.2338441

Daniel Schnitzlein (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

University of Hamburg ( email )

Allende-Platz 1
Hamburg, 20146
Germany

Jens Stephani

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

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