An examination of personality in occupational choice : antagonistic managers, careless managers and extraverted salespeople

This paper examines occupational choice to test if an extended array of variables, including personality traits, influences an individual?s occupational choice. Typically the heterogeneity of labour markets is examined by looking for compensating wage differentials as first advocated by Adam Smith in ?an inquiry into the nature and cause of the wealth of nations? (1776, , 1993 reprint) and hedonic wage theory (Lucas, 1977). These approaches rely on labour markets being in equilibrium and completely reflecting the value of the individual?s characteristics. However, the commonly used earnings functional form has flaws, especially in terms of measures of human capital inputs such as education (Heckman et al., 2003). Further the use of equilibrium analysis in wages is questionable if wages are sticky, markets are imperfect and inhibited by various institutional and sociological factors (Akerlof and Yellen, 1990, Ehrenberg and Smith, 2006, Kaufman and Hotchkiss, 2006). Wages may take a long time to adjust (Friedman, 2007) and observed wages may contain a large component of disequilibrium rents (Bowles et al., 2001a). It can also be argued that wage determination does not directly lend itself to application by policy makers in terms of ways to improve labour force supply and the outcomes of particular individuals. An alternative is the occupational choice approach, which focuses on examining the individual?s choice behaviour in the heterogeneous labour market. It does this by examining the probability that an individual will attain a particular occupation on the basis of their characteristics using discrete choice models. This approach has the advantage that it provides a clear prediction as to what influences choice and occupation outcomes and it lends itself to resolving possible shortages in various types of skilled labour and the formulation of policy, particularly to minimizing ?joblessness?.