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Self-esteem and earnings

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  • Drago, Francesco

Abstract

Recent research in economics suggests a positive association between self-esteem and earnings. Using the National Longitudinal Survey of Youth (NLSY), which administered the Rosenberg Self-Esteem Scale during its 1980 and 1987 interviews, I provide further evidence for the existence of a self-esteem premium by exploiting variation in these measures between the 2 years. I show that self-esteem in 1980 has a sizeable impact on wages 8Â years later, controlling for a wide set of individual characteristics and addressing problems of omitted variable bias and reverse causality. The instrumental variables estimate of the effect of self-esteem in 1987 on earnings is about two times greater than previous OLS estimates would imply. The main explanation for this discrepancy is that the previous OLS estimates are biased downward as a result of measurement error in the reported self-esteem measure.

Suggested Citation

  • Drago, Francesco, 2011. "Self-esteem and earnings," Journal of Economic Psychology, Elsevier, vol. 32(3), pages 480-488, June.
    • Handle: RePEc:eee:joepsy:v:32:y:2011:i:3:p:480-488
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    More about this item

    Keywords

    Self-esteem Non-cognitive skills Earnings;

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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