A Dynamic Model of Personality, Schooling, and Occupational Choice

64 Pages Posted: 20 Nov 2018 Last revised: 28 Mar 2021

See all articles by Petra Todd

Petra Todd

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Weilong Zhang

University of Cambridge - Faculty of Economics

Date Written: January 29, 2019

Abstract

This paper develops a dynamic model of schooling and occupational choices that incorporates personality traits, as measured by the so-called “big five” traits. The model is estimated using the HILDA dataset from Australia. Personality traits are found to play an important role in explaining education and occupation choices over the lifecycle. Results show that individuals with a comparative advantage in schooling and white-collar work have, on average, higher cognitive skills and higher personality trait scores. Allowing personality traits to evolve with age and with schooling proves to be important to capture the heterogeneity in how people respond to educational policies. The estimated model is used to evaluate two education policies: compulsory senior secondary school and a 50% college tuition subsidy. Both policies are effective in increasing educational attainment. They also affect personality traits.

Keywords: personality traits and education policies, occupational choice, unobserved types, human capital investment, dynamic discrete choice

JEL Classification: C54, J24, I24, I28

Suggested Citation

Todd, Petra and Zhang, Weilong, A Dynamic Model of Personality, Schooling, and Occupational Choice (January 29, 2019). Available at SSRN: https://ssrn.com/abstract=3274667 or http://dx.doi.org/10.2139/ssrn.3274667

Petra Todd (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
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IZA Institute of Labor Economics

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

Weilong Zhang

University of Cambridge - Faculty of Economics ( email )

Sidgwick Avenue
Cambridge, CB3 9DD
United Kingdom

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