Research

Evolving Returns to Personality, with Joonas Tuhkuri

under revision for the Journal of Labor Economics

We use cognitive and personality test records of half a million Finnish men to describe the trends in labor-market returns to psychological traits between 2001 and 2015. Consistent with earlier  research, we observe a decline in the value of cognitive skills and an increase in the value of  concognitive skills. Our novel results show that extraversion-related traits drive the rising returns to noncognitive skills. The returns to conscientiousness-related traits have remained stable. The increasing gains from extraversion are driven by those at the lower end of earnings and by the employment margin. We also show that these traits predict different paths in the labor market. Extraversion predicts lower education and more work experience. Cognitive ability and conscientiousness are linked to sorting into highly educated and high-paying jobs.

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.

Teacher Selection in Finland

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.