Silke Anger, Georg F. Camehl, Frauke H. Peter
(Discussion Paper Series / Forschungsinstitut zur Zukunft der Arbeit ; 10561)
Economists consider personality traits to be stable, particularly throughout adulthood.However, evidence from psychological studies suggests that the stability assumption maynot always be valid, as personality traits can respond to certain life events. Our paperanalyzes whether and to what extent personality traits are malleable over a time spanof eight years for a sample of working individuals. Furthermore, we specifically look atchanges in personality traits after a major adverse life event: involuntary job loss. We usedata from the German Socio-Economic Panel Study (SOEP) from 2004 to 2014 – a periodover which individuals’ Big Five personality inventory was measured three times. Ourdataset allows us to exploit detailed employment information, particularly reasons for jobtermination and unemployment spells. We focus solely on plant closures as a reason forjob termination. Job loss due to plant closure is widely used as a relatively exogenous eventto identify causal effects. Our results suggest that personality traits are indeed malleableduring adulthood. Although the Big Five measures are relatively stable within the overallpopulation of workers, we find an increase in openness, that is, the willingness to seeknew experiences, for the average displaced worker. This increase, however, is fully driven byindividuals with high educational attainment and by those who find a new job immediatelyafter dismissal. The other dimensions of the Big Five personality inventory remain nearlyunchanged after an involuntary job loss. Our findings hold for a number of robustnesschecks and are supported by the results of a falsification test using a placebo treatment.