Estimating the Effect of Personality on Male-Female Earnings

41 Pages Posted: 13 Aug 2004

See all articles by Gerrit Mueller

Gerrit Mueller

ZEW – Leibniz Centre for European Economic Research; IZA Institute of Labor Economics

Erik Plug

University of Amsterdam - Amsterdam School of Economics (ASE); Tinbergen Institute; IZA Institute of Labor Economics

Date Written: August 2004

Abstract

This paper uses the Five-Factor Model of personality structure as an organizing framework to explore the effects of personality on earnings. Using data from a longitudinal survey of American high school graduates, we find that extroversion, agreeableness, conscientiousness, neuroticism and openness to experience are rewarded/penalized significantly and differentially across genders. Antagonistic, emotionally stable and open men enjoy substantial earnings advantages over otherwise similar individuals. In case of women, the labor market appears to value conscientiousness and openness to experience. The positive returns to openness are very similar across genders, suggesting that being creative, unconventional and artistic is equally important for men and women working in all types of occupations. Moreover, we find significant gender differences in personality characteristics. Decomposition of personality-based earnings differentials into trait and parameter effects suggests that gender-atypical traits reduce the earnings advantage that individuals would otherwise enjoy under their own-sex wage structure. Overall, we find that the impact of personality on earnings is significant but not large - not trivial either - and comparable to the impact of differences in cognitive ability.

Keywords: personality and wages, gender wage gap

JEL Classification: J16, J31

Suggested Citation

Mueller, Gerrit and Plug, Erik, Estimating the Effect of Personality on Male-Female Earnings (August 2004). IZA Discussion Paper No. 1254. Available at SSRN: https://ssrn.com/abstract=576123

Gerrit Mueller (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 103443
Mannheim, 68034
Germany
0049 621 1235 152 (Phone)
0049 621 1235 225 (Fax)

HOME PAGE: http://www.zew.de/en/mitarbeiter/mitarbeiter.php3?action=mita&kurz=gmu

IZA Institute of Labor Economics

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

Erik Plug

University of Amsterdam - Amsterdam School of Economics (ASE) ( email )

Roetersstraat 11
1018 WB Amsterdam
Netherlands
+31 20 5254311 (Phone)
+31 20 5254310 (Fax)

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

IZA Institute of Labor Economics

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

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