Proceedings of the 9th International Conference on Research in Business, Management and Economics
Year: 2024
DOI:
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Cloninger’s Temperament Traits, Economic Preferences and Earnings
Emmi Wilén, Sanna Huikari, Jouko Miettunen, Marko Korhonen
ABSTRACT:
Background: Technological advancement is changing the labour market skill demands. Research has shown decline in labour market rewards for cognitive skills while non-cognitive skills have become increasingly valued. We assess earnings returns to Cloninger’s temperament traits and risk, time, and social preferences across different skill-level jobs utilizing longitudinal, population-based Northern Finland Birth Cohort 1966 data combined with Finnish register data. Cohort members temperament traits were measured at 31 and 46 years and preferences at 46 years. We include in our sample all individuals with at least one measure of temperament (n=4878) and in subsample all individuals with also preferences (n=3727). Methods: We incorporate non-cognitive skill variables into a standard human capital wage equation that we estimate using OLS. We stratify our analyses by sex and job skill-level. To examine potential endogeneity between temperament traits and earnings, we utilize the sub-sample of individuals reporting their temperament twice. We assess whether temperament traits measured at 31 and 46 years predict earnings similarly and also use temperament traits measured at 31 as instruments for those measured at 46 in IV regression. Results: Non-cognitive skills are mainly rewarded at high-skill jobs. Adding non-cognitive skills into the standard human capital wage model increases R-squared from 29.7 to 35.6/20.6 to 28.2 for females/males in high-skill jobs. For both sexes, risk taking is most strongly associated with earnings. Analyses accounting for endogeneity provide results generally consistent with the main results, mitigating endogeneity-related concerns. Conclusion: We show that non-cognitive skills are predominantly rewarded in high-skill jobs.
keywords: non-cognitive skills; wage determination; birth cohort; longitudinal study; labour market