Labor Market Returns to Personality: A Job Search Approach to Understanding Gender Gaps

This paper examines the effects of the Big Five personality traits on labor market outcomes and gender wage gaps using a job search and bargaining model with parameters that vary at the individual level. The analysis, based on German panel data, reveals that both cognitive and noncognitive traits significantly influence wages and employment outcomes. Higher conscientiousness and emotional stability and lower agreeableness levels enhance earnings and job stability for both genders. Differences in the distributions of personality characteristics between men and women account for as much of the gender wage gap as do the large differences in labor market experience.