| Abstract: |
Many employers and employees believe that non-cognitive skills are an
important contributor to labor market success. This study has assessed the
empirical evidence for such a claim in the case of Bangladesh by evaluating
unique employer-employee matched labor market data. The analysis is based on
data collected from 6,981 workers in 500 formal sector firms in Bangladesh's
five largest formal economic sectors. Using ordinary least squares and firm
fixed-effect models, the study assesses correlations between wages and the
so-called"big five"personality traits, and augments the analysis with the
latent personality scores captured by the Rasch model. Comparing the ordinary
least squares and fixed-effect models reveals statistically significant
correlations between personality traits and wages, within and across firms.
The results appear to indicate that non-cognitive skills are correlated with a
worker's likelihood of achieving success in the labor market. Although many of
the findings are consistent with the literature, the analysis reveals specific
patterns that appear to be unique to Bangladesh, including a positive
correlation between ?emotional stability? and wages and a negative correlation
between"grit"and wages, especially among manufacturing workers. Differences
across firms could indicate that firms that offer higher wages may tend to
attract workers with distinct types of non-cognitive skills, whereas
differences within firms may indicate that variations in non-cognitive skills
are associated with disparities in firm-level wage structures. Correlations
between wages and personality traits are more prominent among large firms than
among small or medium-sized firms. |