This article is excerpted from Professor Cheng Hong’s article in his column on On March 29, 2017, “Chinese Labor lacks of Innovative Personality Traits”,in China Business News.
Personality affects a person’s life immensely. People with the same external conditions and initial endowment but different personalities make a big difference in their life and career. However, observing from a large sample, we figure out whether personality has any causal effect on individual career development. Whether personality itself affects individual destiny or other seldom recognized “hidden variables” highly correlated with personality traits affect the trajectory of one’s fate, it cannot be worked out without scientific research.
Recently, I have published an article titled “The Effects of Personality Traits on Wage: Empirical analyses based on China Employer-Employee Survey (CEES)” together with my coauthor Li Tang in Economic Research Journal. This article adopted the CEES data collected by completely random stratified sampling method in a large sample of 11,000 employees’ personality traits. It is the first in-depth study on the causal effect of personality traits on Chinese labor wages. Using internationally accepted "Big Five" personality scale, we investigated and assessed the personality traits of Chinese labor at the current stage by fractal dimension. Controlling individual education, household registration, skill status, health state, the surveyed firm’s characteristics, industry characteristics, labor rights protection and other factors, we analyzed the effects of different personality traits on labor wages. Using CEES data collected employees matching abundant feature information, we took advantage of causal identification strategy of the treatment effect model (Treatment Effect) and effectively rejected the interference of "hidden variables" on the causal effect test.
The research results are thought-provoking. We find that compared with current personality traits of workers in the developed countries like the U.S, Germany and Britain, Chinese workers have significantly more advantages in preciseness and obedience. This shows that Chinese workers have always been diligent and reliable, serious and thoughtful, tolerant and considerate in personality. Relying such excellent qualities, China has taken great advantage of its demographic dividend during over 30 years since the reform and opening up and witnessed the high-speed economic growth. On the other hand, it is suggested that Chinese workers overall present weaker indicators in personality traits including openness, extroversion, adventurous spirit and risk preference than workers in developed countries. After controlling different firms’ characteristics, the Chinese workers present 20% lower innovativeness than workers in developed countries. It indicates that lack of innovativeness is a prominent problem among current Chinese workers, which also explains why China have invested a great deal in innovation but harvested little.
Based on the CEES large-scale survey data of personality traits, we use the causal inference method of the intervention effect model to test the causal effect of the personality traits, especially the innovative personality traits, on the effects of labor wages. We found that the innovative personality traits have significant causal effect on the average monthly wages and hourly wages provided that the personality traits such as preciseness, obedience and other traits including educational level, skill status, health level, firm’s characteristics and industry characteristics are similar. The statistics show that, regardless of using openness, extroversion or adventurous spirit, risk employees with high innovative personality traits have 11 % - 14% higher average income return. Moreover, the contribution of the innovative personality traits to workers’ wages are 30% higher than that of other personality traits like preciseness, obedience. It is proven that personality not only can affect one’s fate, but also, in the background that the demographic dividend is disappearing and the Chinese economy is transforming from the traditional elements driven to innovation-driven transformation, the innovative personality traits will have a more important effect on an individual’s destiny.