Occupational Choice-Personality Matters

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DISCUSSION PAPER SERIES

IZA DP No. 4105

Occupational Choice: Personality Matters
Roger Ham P.N. (Raja) Junankar Robert Wells April 2009

Forschungsinstitut zur Zukunft der Arbeit Institute for the Study of Labor

Occupational Choice: Personality Matters
Roger Ham
University of Western Sydney

P.N. (Raja) Junankar
University of Western Sydney and IZA

Robert Wells
University of Western Sydney

Discussion Paper No. 4105 April 2009

IZA P.O. Box 7240 53072 Bonn Germany Phone: +49-228-3894-0 Fax: +49-228-3894-180 E-mail: iza@iza.org

Any opinions expressed here are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.

IZA Discussion Paper No. 4105 April 2009

ABSTRACT Occupational Choice: Personality Matters
In modern societies, people are often classified as “White Collar” or “Blue Collar” workers: that classification not only informs social scientists about the kind of work that they do, but also about their social standing, their social interests, their family ties, and their approach to life in general. This analysis will examine the effect of an individual’s psychometrically derived personality traits and status of their parents on the probability of attaining a white collar occupation over the baseline category of a blue collar occupation; controlling for human capital and other factors. The paper uses data from the Household Income and Labour Dynamics in Australia (HILDA) survey to estimate a random effects probit model to capture the effects on the probability of being in a white collar occupation. The results are then examined using the average marginal effects of the different conditioning variables over the whole sample. The analysis confirms the previous findings of human capital theory, but finds that personality and parental status also have significant effects on occupational outcomes. The results suggest that the magnitude of the average marginal effect of parental status is small and the effect of the personality trait “conscientiousness” is large and rivals that of education. Finally, estimates of separate models for males and females indicate that effects differ between the genders for key variables, with personality traits in females having a relatively larger effect on their occupational outcomes due to the diminished effects of education.

JEL Classification: Keywords:

J24

occupational choice, personality, human capital, dynasty hysteresis

Corresponding author: P.N. (Raja) Junankar School of Economics and Finance College of Law and Business Campbelltown Campus University of Western Sydney Locked Bag 1797 Penrith South DC, NSW 1797 Australia E-mail: raja.junankar@uws.edu.au

Introduction1 One of the major features of labour markets, compared to other markets within an economy, is the large degree of heterogeneity found within the commodity that is exchanged, labour services. The two sources of this heterogeneity in...
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