Maintaining (Locus of) Control? Assessing the Impact of Locus of Control on Education Decisions and Wages

Rémi Piatek and Pia Pinger

No 5289, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper demonstrates that locus of control, i.e. whether individuals believe that reinforcement in life comes from their own actions instead of being determined by luck or destiny, is an important predictor of the decision to obtain higher education. Furthermore, the authors find that premarket locus of control, defined as locus of control measured at the time of schooling – before the individual enters the labor market – does not significantly affect later wages after controlling for education decisions. In light of the existing literature, which finds mostly positive effects of contemporaneous locus of control measures on wages, this indicates that it is important to distinguish between premarket skills and those that are already influenced by labor market experience and age. Last, simulation of the model shows that moving individuals from the first to the last decile of the locus of control distribution significantly shifts the distribution of schooling choices, thus indirectly affecting later wages. The paper conveys important policy implications. If some personality traits, such as locus of control, influence the cost of education but not outcomes directly, these individual characteristics may keep individuals from studying who, once they reach the labor market, are no less successful than other individuals. If these individuals are at high risk of dropping out of school, early personality tests and targeted mentoring of students with an external locus of control are a means to countervail skill shortages in society.

Keywords: latent factor model; wages; locus of control; data set combination (search for similar items in EconPapers)
JEL-codes: C31 J24 J31 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2010-10
New Economics Papers: this item is included in nep-cbe, nep-edu and nep-lab
References: View complete reference list from CitEc
Citations: View citations in EconPapers (51)

Published - substantially revised version published as 'Maintaining (Locus of) Control? Data Combination for the Identification and Inference of Factor Structure Models' in: Journal of Applied Econometrics, 2016, 31(3), 734-755

Downloads: (external link)
https://docs.iza.org/dp5289.pdf (application/pdf)

Related works:
Working Paper: Maintaining (Locus of) Control?: Assessing the Impact of Locus of Control on Education Decisions and Wages (2010)
Working Paper: Maintaining (locus of) control? Assessing the impact of locus of control on education decisions and wages (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp5289

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().