The Role of Personality, Cognition and Shocks in Determining School Attainment and Age of Entry into the Labor Market

Kira M. Villa, University of New Mexico
David E. Sahn, Cornell University and University of Auvergne

Growing evidence in the economics literature links “noncognitive" skills to economic, behavioral and demographic outcomes in the developed world. However, there is little such evidence linking these traits to economic outcomes in developing countries. Moreover, research in the economics literature generally estimates the effects of a general noncognitive aggregate rather than specific traits. This paper estimates the effect of shocks, cognition and five specific personality traits on school attainment and age of labor market entry. The personality traits examined are known as the Big Five Personality traits: Openness to Experience, Conscientiousness, Extroversion, Agreeableness and Neuroticism. We estimate hazard models of households’ decisions to remove children from school and their subsequent entry into the labor market. We further measure the effects of shocks to households’ income, assets and labor supply on these decisions and how these shocks interact with a child’s cognitive ability and personality in affecting our outcomes of interest.