Gender-Specific Personality Traits and Their Effects on the Gender Wage Gap: A Correlated Random Effects Approach using SOEP Data

Abstract

Using longitudinal data from the German Socio-Economic Panel (SOEP), this article examines whether gender wage differentials occur due to differences in prototypical personality traits of women and men and provides the first application of a gender wage gap decomposition on the basis of a correlated random effects model. Main results show that agreeableness and openness are the most important personality traits in explaining wages and wage differentials. Openness has a positive effect and agreeableness has a negative effect on earnings for men, while the opposite effects are found for women. Concerning the gender wage gap, analyses show that although gender differences in openness and agreeableness explain small parts of the gap, gender differences in the returns of agreeableness and openness are larger.