Labor market performance of dropouts: the role of personality

Purpose – The purpose of this paper is to provide evidence on labor market careers of dropouts with various levels of education. Design/methodology/approach – The paper compares the labor market careers of dropouts and non-dropouts between ages 15 and 50 by using longitudinal data. The paper analyses how the results change when the authors control for differences in personality characteristics. Findings – The paper finds that dropping out diminishes one's success in the labor market but this connection is reduced when the model is augmented with personality. Dropouts seem to have or lack certain personality characteristics that are associated with labor market success. These findings suggest that dropping out is either an adverse signal of non-cognitive skills and, thus, work performance and productivity, or personality characteristics are related to preferences toward career and work orientation, or both. Originality/value – The paper analyses how the impact of dropping out on labor market outcomes changes when differences in personality characteristics are taken into account. The broad definition enables us to investigate how dropping out in general is related to labor market success.