The returns to cognitive and non-cognitive abilities in Germany

Substantially, the results indicate that some of our a priori expectations are met while
others are not in line with our hypotheses or previous findings. We in particular suggested
that both openness and conscientiousness would be positively related to earnings. While
there are wage premiums for females of about 2% in the OLS regressions to about 6% in the
EIV models for a one standard deviation increase in openness, the coefficients indicate a
wage penalty of 2% to 4% for males. This is in contrast to the results of Mueller and Plug
(2006). However, note again that the theoretical conjectures from the psychology literature
allow for a negative effect on labor market success since openness is linked to autonomy and
non-conformity (Judge et al., 1999). Another difference by gender is found for
conscientiousness. The coefficients indicate a wage penalty for female workers but they are
not statistically significant. Men on the other hand seem to gain from conscientiousness
which is in line with our expectations. There is a wage premium of about 1.5% for a one
standard deviation increase in conscientiousness.
There is also mixed evidence by gender with respect to extraversion. We find a
negative wage differential of almost 4% for women but a 3% wage premium for males for a
one standard deviation increase in extraversion (Table 1, columns 2 and 4). Based on prior
evidence, our expectation was that extraversion would not be related to wages but note again
that theoretical reasoning from the psychology literature allows for both positive and
negative effects on job performance (Judge et al., 1999).
Agreeableness is not associated with males’ wages in the error-correction model but
negatively related to females’ wages. The point estimates in the full specifications suggest
for a wage penalty of 3% for ‘being nice’, i.e. a one standard deviation increase in
agreeableness, which even increases to almost 7 % in the EIV regression (Table 1, columns
1 and 2). While this may seem implausible at first glance it is consistent with theoretical
arguments above and with previous research (cf. Nyhus and Pons, 2005, or Mueller and
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