Evolving Returns to Personality, with Joonas Tuhkuri
forthcoming in the Journal of Labor Economics
We analyze trends in labor-market returns to psychological traits using data from half a million Finnish men from 2001 to 2015. Cognitive skills’ value declined, while noncognitive skills’ value increased. Our novel findings show that extraversion drives this rise, while conscientiousness remains stable. Extraversion’s rising returns are most pronounced for lower earners and those on the employment margin. These traits predict different labor market paths: extraversion predicts lower education and more work experience, while cognitive ability and conscientiousness lead to higher education and high-paying jobs.
PhD Dissertation
Impact of Kindergarten on School Preparedness: Evidence from a Nationwide RCT in Finland, with Oskari Harjunen and Matti Sarvimäki
Psychological Traits and Adaptation to Labor-Market, with Joonas Tuhkuri
Labor markets are in constant change. Which personality traits and skills help workers to deal with a changing environment? This paper documents how responses to labor-market shocks vary by individuals' psychological traits. We construct measures of cognitive ability, extraversion, and conscientiousness using standardized personality and cognitive tests administered during military service to approximately 80% of Finnish men born 1962–1979. We analyze establishment closures and mass layoffs between 1995–2010 and document heterogeneous responses to the shock. Extraversion is the strongest predictor of adaptation: the negative effect of a mass layoff on earnings is about 20% smaller for those with one standard deviation higher scores of extraversion. Conscientiousness appears to have no differential impact conditional on other traits. Cognitive ability and education predict a significantly smaller initial drop in earnings, but have no long term advantage. Our findings appear to be driven directly by smaller dis-employment effects: extraverted and high cognitive-ability individuals find re-employment faster in a similar occupation and industry they worked in before. Extraversion's adaptive value is robust to controlling for pre-shock education, occupation, and industry, which rules out selection into different careers as the driving mechanism. Extraverts are slightly more likely to retain employment in their current establishment during a mass layoff event, but the retention effect is not large enough to explain the smaller earnings drop.
Finland's success in international student comparisons is often attributed to the quality of its teachers. In this paper I examine the teacher selection process in Finland and highlight three key new findings. First, using rich administrative data for graduating cohorts between 1973-2012, I show that teacher graduates have consistently lower standardized test performance in comparison to other university graduates. However, in contrast to findings from other developed countries, they have been closing that gap during the last 40 years. Second, past test performance is a poor predictor of teacher aptitude, as measured by expert evaluators during entrance interviews for teacher training programs. This implies that the performance gap between teaching and other programs is not due to lack in applicant quality, but due to uncorrelated factors that influence the aptitude test performance in teaching. In other words, teacher training programs in Finland are not looking to enroll the academically best students. Third, relative to other university graduates with similar academic track record, teachers have high wages but low earnings, which helps to explain the popularity of teacher training programs in certain demographics.