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Locus of Control and Low-Wage Mobility

SOEPpapers 589, 29 S.

Daniel D. Schnitzlein, Jens Stephani


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Published in: Journal of Economic Psychology 53 (2016), 164-177


We investigate whether non-cognitive skills - in particular Locus of Control - are important determinants of the labour market processes at the low-wage margin. Based on data from the German Socio-Economic Panel, we estimate dynamic multinomial logit models with random effects and investigate whether Locus of Control influences the probability of being higher-paid or low-paid as well as the probability of escaping low wages by moving up to higher-paid employment. Our results reveal a significant amount of state dependence in low pay even after controlling for Locus of Control and other non-cognitive skills. Furthermore, compared to individuals with an external Locus of Control, individuals with a more internal Locus of Control have a significantly higher probability of being higher-paid instead of low-paid. Conditional on being low-paid, individuals with an internal Locus of Control additionally have a significantly higher probability of moving to higher-paid employment in the following year than individuals with an external Locus of Control.

JEL-Classification: J30;J60
Keywords: low-wage, wage mobility, personality, non-cognitive skills, inequality, SOEP
Frei zugängliche Version: (econstor)