The return to noncognitive characteristics in the Russian labor market

Abstract

For decades economic literature considered intellect to be the main determinant of individual results in the labor market. While there has been significant research on the traditional human capital as the main determinant of labour market results, there is huge heterogeneity across individual wages on the labour market which remains unexplained. Noncognitive characteristics represent a relatively stable way of thinking, feeling and behaving in certain situations, which appears to provide an explanation for these differences. This study presents scarce evidence of the link between noncognitive skills and economic outcomes conducted on extensive Russian data. Using RLMS—HSE data for 2016—2017, returns to the Big Five taxonomy of personality traits are estimated with an extended Mincer-type model. The results are in line with previous research on the topic and indicate the existence of a strong link between noncognitive skills, employment and wages for all socio-demographic and professional groups. However, there is considerable heterogeneity in the economic returns across these groups. Besides, the measured effect of personality traits is comparable to the effect from the traditional human capital components.