Using long-term Finnish register data on labor market outcomes, we examine how personality traits predict the sorting of individuals into public and private sector employment. Our findings suggest that personality-based sectoral sorting primarily occurs during the selection of educational fields. Once education and occupation are controlled for, public sector employment is negatively related to self-confidence among males and extraversion among females. We also find that pecuniary incentives and shifts between the sectors may partly explain these relationships. Overall, our empirical results, combined with values that we use as theoretical mechanisms, suggest that values may serve as mediators explaining our results.
LABOUR: Review of Labour Economics and Industrial Relations, 2023; 1-28.
