Gender Differences in Earnings Rewards to Personality Traits in Wage-employment and Self employment Labour Markets

Abstract

In an extensive review of wage determination papers, it is concluded that the standard demographic and human capital factors explain little of earning differentials. Consequently, there is a growing inter est among economists to include non-cognitive skills measured by personality traits in recent empirical literature to explain variations in earnings. In a bid to contribute empirical evidence to this strand of lit erature, this study examines the associations between the Big-Five personality traits (i.e., agreeableness, conscientiousness, openness, extraversion and neuroticism) and earnings, using the World Bank’s Skills towards Employment and Productivity (STEP) data on Ghana. The study employed regression tech niques to estimate a series of semi-logarithmic wage equations that include demographic and human capital factors and the Big-Five personality traits to determine how important these factors are in explaining wage and self-employment earnings. Furthermore, the estimations of the wage equations are done separately for males and females to highlight any gender differences in the way personality traits contribute to earnings. Findings are largely consistent with the literature but uniquely demonstrate that in a power-distant culture like Ghana, where, traditionally, girl-child education has been relegated to the background, agreeable females, and not males, are rewarded in the formal wage employment labour market. However, in the informal self-employment labour market, conscientious males, and not females, are positively rewarded with higher earnings. These unique findings contribute to our under standing of the gender differences in the relative importance of non-cognitive skills in the formal and informal labour markets.