Immigrant-Native Wage Gap in Sweden: Do Personality Traits Matter?

Abstract

AbstractSweden has an immigrant-native wage gap. Although the impact of educational attainment and other variables have been studied, the impact of specific personality traits analyzed separately on the wage gap remains poorly understood. In this study, we used a unique dataset that usually contains unobserved personality traits evaluated by psychologists during the Swedish military conscription, as well as post-conscription labor market data to examine whether and to what extent heterogeneity in four different personality traits contributes to disparities in wages among men born in Sweden (both Swedish-born parents) and naturalized men born outside EU-15. The sample consisted of 278,660 males (6% with a foreign background) and was based on the 1975–1990 birth cohorts. The findings show that two of the four personality traits, i.e., intensity and emotional stability, significantly contribute to the immigrant-native wage gap. Men born outside the EU-15 received lower returns (2–3%) from these traits compared to men born in Sweden. The difference in returns from these traits was robust across the sensitivity analyses. Our overall conclusion is that specific personality traits play a role in the immigrant-native wage gap.