The effects of personality traits on adult labor market outcomes: Evidence from siblings

While large literatures have shown that cognitive ability and schooling increases employment and wages, an emerging literature examines the importance of so-called “non-cognitive skills” in producing labor market outcomes. However, this smaller literature has not typically used causal methods in estimating the results. One source of heterogeneity that may play an important role in producing both personality and other non-cognitive skills and labor market outcomes is family background, including genetic endowments. This paper is the first to use sibling differences to estimate the associations between personality on employment and wages and is also able to control for many other sources of heterogeneity, including attractiveness, cognitive ability, schooling, occupation, and other factors. Overall, the findings suggest that personality measures have important associations with labor market outcomes in adulthood and that the results vary considerably by demographic group. The findings also highlight the potential role of extraversion in being associated with favorable labor market outcomes, which has not been documented in many other studies.

► Personality measures are linked with adult labor market outcomes.
► National longitudinal data with siblings are used to control for several types of unobserved heterogeneity.
► Extraversion is found to be an important determinant of employment and wages.