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The Role of Personality Traits HUMAN CAPITAL AND EMPLOYMENT SUCCESS: THE ROLE OF PERSONALITY TRAITS by Savelieva Zoia A thesis submitted in partial fulfillment of the requirements for the degree of MA in Economic Analysis Kyiv School of Economics 2020 Thesis Supervisor: Professor Kupets Olga Approved by ___________________________________________________ __________________________________________________ __________________________________________________ __________________________________________________ Date ___________________________ Kyiv School of Economics Abstract HUMAN CAPITAL AND EMPLOYMENT SUCCESS: THE ROLE OF PERSONALITY TRAITS by Savelieva Zoia Thesis Supervisor: Professor Kupets Olga Over a long period of time IQ and educational levels were treated to be the main determinants of employment success. The aim of this study is to show that personality traits (patterns of thoughts, feelings, and behaviors) do play an important role in employment status, occupation position, and economic sector choice. Using cross-section data from the STEP survey of the urban working-age population in Ukraine we found out that emotional stability and openness to experience play a key role in explaining probability to be employed, occupy a managerial position, or being employed in a certain industry. Family background factors were shown to be a significant mediator of the relationship between personality traits and employment characteristics. The obtained results might be used for further policy decisions in pre-school, primary, secondary, and higher education as well as in workplace training programs. TABLE OF CONTENTS CHAPTER 1. INTRODUCTION ................................................................................. 1 CHAPTER 2. LITERATURE REVIEW ...................................................................... 4 CHAPTER 3. DATA DESCRIPTION AND METHODOLOGY ...................... 8 3.1 Methodology ............................................................................................................... 8 3.2 Potential issues ......................................................................................................... 12 3.3 Data Description ...................................................................................................... 15 CHAPTER 4. ESTIMATION RESULTS AND ROBUSTNESS CHECK ....... 23 4.1 Estimation results .................................................................................................... 23 4.1.1 Model for employment ..................................................................................... 23 4.1.2 Model for the occupational attainment ......................................................... 25 4.1.3 Model for the economic sector ....................................................................... 27 4.2 Handling reverse causality ...................................................................................... 28 4.3 Robustness check ..................................................................................................... 30 4.4 Mediating analysis .................................................................................................... 30 CHAPTER 5. CONCLUSIONS AND POLICY IMPLICATIONS ................... 33 5.1 Conclusions ............................................................................................................... 33 5.2 Policy implications ................................................................................................... 34 WORKS CITED .............................................................................................................. 39 APPENDIX A STRUCTURE OF THE STEP TEST ........................................... 49 APPENDIX B DESCRIPTIVE STATISTICS ........................................................ 50 APPENDIX C ESTIMATION RESULTS ................................................................ 56 ii LIST OF FIGURES Number Page Figure 1. The ROC curve for the logit model (dependent variable: Employed) ...... 25 Figure B - 1. Distribution of standardized personality traits ..................................... 55 iii LIST OF TABLES Number Page Table 1. Summary of hypotheses ..................................................................................... 8 Table 2. Suest-based Hausman tests of IIA assumption for the multinomial logit model (dependent variable: Occupation) (N=1027) ........................................ 10 Table 3. Suest-based Hausman tests of IIA assumption for the multinomial logit model (dependent variable: Sector) (N=1025) ................................................ 10 Table 4. Descriptive statistics of socio-emotional skills (non-standardized) ......... 17 Table 5. Mean value of personality traits by employment status ............................. 19 Table 6. Mean value of personality traits by occupational attainment .................... 20 Table 7. Mean value of personality traits by industry ................................................. 21 Table 8. Marginal effects for logit regression (dependent variable: Employed) ............. 24 Table 9. Estimation results for the multinomial logit (dependent variable: Occupation) ................................................................................................................................ 27 Table 10. Estimation results for the multinomial logit regression (dependent variable: Sector) ...................................................................................................................... 28 Table A - 1. Aggregation of socio-emotional skills ..................................................... 49 Table B - 1. Variable description used for building the models ............................... 50 Table B - 2. Distribution of dependent variables ........................................................ 52 Table B - 3. Descriptive statistics of independent variables ...................................... 53 Table B - 4. Correlations between socio-emotional skills and education level ...... 54 Table B - 5. Mean value of personality traits by gender and age .............................. 55 Table C - 1. Marginal effects for logit regression (dependent variable: Employed) ...... 56 Table C - 2. Estimation results for multinomial logit regression (dependent variable: Occupation).............................................................................................................. 58 iv LIST OF TABLES - Continued Table C - 3. Estimation results for the occupational attainment for males and females separately ................................................................................................ 61 Table C - 4. Estimation results for multinomial logistic regression (dependent variable: Sector) ...................................................................................................................... 62 Table C - 5. Estimation results for Sector for males and females separately ........... 65 Table C - 6. Multivariate probit model. Correlation coefficients between residuals of employment and personality traits .............................................................. 66 Table C - 7. Multivariate probit model. Correlation coefficients between residuals of occupation and personality traits ................................................................ 66 Table C - 8. Multivariate probit model. Correlation coefficients between residuals of sector and personality traits .......................................................................... 67 Table C - 9. Effects of regression-adjusted personality traits on employment status ................................................................................................................................ 68 Table C - 10. Effects of regression-adjusted personality traits on occupational attainment ............................................................................................................. 69 Table C - 11. Effects of regression-adjusted personality traits on sector ............... 70 Table C - 12. Robustness check. Effects of personality traits on employment status with interaction terms ........................................................................................ 71 Table C - 13. Robustness check. Effects of personality traits on occupational attainment with interaction terms .................................................................... 72 Table C - 14. Robustness check. Effects of personality traits on the economic sector with interaction terms ............................................................................ 73 Table C - 15. Percentage of total effect of personality traits on employment explained by family background mediators .................................................... 74 Table C - 16. Percentage of total effect of personality traits on occupation explained by family background mediators ...................................................................... 75 v LIST OF TABLES - Continued Table C - 17. Percentage of total effect of personality traits on economic sector explained by family background mediators .................................................... 77 vi ACKNOWLEDGEMENTS The author would like to express the greatest appreciation to her thesis supervisor Professor Olga Kupets for her motivation, meaningful feedback, constant support, and guidance during working on a thesis. I also wish to thank Fredrik Carlsen and all other research workshop professors, who were reviewing this paper and contribute to its development by their comments and suggestions.
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