Abstract
In recent years, personality psychology has been integrated into the economics and there are large number of papers discussing the effects of personality traits about workers’ wages, skills, performances and even health behaviors. However, these papers are almost based on the empirical evidences from developed economies. This reason is that in most developing countries, they are lack of large survey samples having both workers’ information about personality traits and their behaviors and outcomes in labor market, especially in China. Moreover, although there are a few papers researching the statistical correlation between the personality traits and workers’ wages, according to what we know, this paper is the first one to make empirical analyses about the causal effects of personality traits on workers’ compensation in Chinese labor market. As there is lack of high-quality matched employer-employee survey data, for existing papers in researching the effects of personality traits on workers’ behaviors, it is very difficult to effectively solve the endogeneity problem such as the selectivity bias and omitted variable bias, caused by unobserved essential firms and workers’ characteristics.
Therefore,with the first matched employer-employee survey data which is called “China Employer-Employee Survey”(CEES), this paper can effectively choose appropriate identification strategy to calculate causal effects of personality traits on workers’ wages. This survey was executed by Institute of Quality Development Strategy (IQDS) in Wuhan University, which have surveyed over 1000 firms and almost 10,000 workers, with strictly random sampling. Using the CEES data, this paper firstly can effectively calculate workers’ personality traits such as conscientiousness, openness, extra-version, neurotic-ism and agreeableness with the international standard BFI-44 questionnaires. Moreover, with this survey data, this paper can add more variables into workers’ wage equation, not only including the Mincer equation’s control variables but also workers’ other characteristics such as cognitive skills, skill training and firms’ characteristics such as ownership, social insurance coverage, labor union governance, external supervision and market competition. Thus, compared with existing papers, this paper can solve the omitted variable bias more effectively. Furthermore, in order to solve the selectivity bias, this paper adopts the treatment effect model to make causal inference about the effects of personality traits on workers’ wages.
The main findings are as follows. Firstly, in the benchmark regression with the OLS estimation, this paper finds that the positive personality traits such as openness, conscientiousness play a significant role in promoting employees’ wages. Secondly, compared with the existing papers based on empirical analyses from the developed countries, this paper finds that the innovative personality represented by openness has more contribution to labor wages in Chinese labor market, and the partial effect of openness is more robust. Thirdly, with openness as an example, this paper adopts the treatment effect model to study the causal effects of innovative personality traits on wages. Estimation results show that the average treatment effects of openness on wages are all significant at 5% significance level at least . Finally, with the adventure spirit and risk preference as alternative proxy variables, the causal effects of innovative personality trait on labor wages are also robustly significant.
Key words: Big Five Personality; Wages; Openness; Treatment Effect