Locus of Control and Low-Wage Mobility

Abstract

We investigate whether non-cognitive skills – in particular Locus of Control – are important determinants of mobility processes for male workers at the low-wage margin. Our results reveal a significant amount of state dependence in low pay even after controlling for 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 have a significantly higher probability of moving to higher-paid employment in the following year than individuals with an external Locus of Control. Our results suggest that having an internal Locus of Control is an important non-cognitive skill in the context of low wages. It may help individuals to avoid low-wage jobs and to move from low-paid jobs to higher-paid jobs.