The Role of Personality, Cognition, and Shocks in Determining Labor Outcomes of Young Adults in Madagascar

Abstract

There is growing evidence that noncognitive skills affect economic, behavioral, and demographic outcomes in the developed world. However, there is little such evidence in developing country contexts. This paper estimates the joint effect of five specific personality traits and cognition measured through achievement test scores on the age of entry into the labor market, labor market sectoral selection, and within sector earnings for a sample of young adults in Madagascar. The personality traits that we examine are known as the Big Five Personality Traits: Openness to Experience, Conscientiousness, Extraversion, Agreeableness, and Neuroticism. Additionally, we look at how these traits interact with household-level shocks in determining their labor market entry decisions. We find that personality, as well as cognitive test scores, have an effect on these outcomes of interest, and that their impact on labor supply is, in part, a function of how individuals respond to exogenous shocks.