Monozygotic twins: Standard OLS method may over-estimate the relation between personality and income; neuroticism is related to lower permanent income; and a facet of extraversion (activity) is related to higher permanent income

Is personality related to permanent earnings? Evidence using a twin design. Terhi Maczulskij, Jutta Viinikainen. Journal of Economic Psychology, https://doi.org/10.1016/j.joep.2018.01.001

Highlights
•    We study the relation between personality and permanent income using twin data.
•    Twin desing allows us to control for shared genetic and family effects.
•    Standard OLS method may over-estimate the relation between personality and income.
•    Within-MZ estimates show that neuroticism is related to lower permanent income.
•    A facet of extraversion (activity) is related to higher permanent income.

Abstract: Using twin survey combined with register-based panel data on labor market outcomes, the authors examine the association between personality characteristics and long-term earnings among prime working-age individuals. The long-term earnings were measured over the 1990-2008 period. The sample contains 4,642 twin pairs, of which 53% are females. In contrast to previous studies, this paper uses the within-twin dimension of the data to control for shared family background and confounding genetic factors. The results suggest that unobserved genetic differences may introduce omitted variable bias in standard ordinary least square results. After controlling for shared environment and genetic background, the authors find that a facet of extraversion (activity) is related to higher (β = 0.046), and neuroticism is related to lower (β = -0.060) permanent earnings in the labor market. The lower earnings of more neurotic individuals are likely explained by the weaker attachment in the labor market.

Keywords: personality; earnings; labor market outcomes; unobserved heterogeneity; twin studies

Soccer penalty kicking: Professionals do not perform worse when they experience unfair advantages

Coping with advantageous inequity–Field evidence from professional penalty kicking. Mario Lackner, Hendrik Sonnabend. Johannes Kepler University of Linz, Department of Economics Working Paper No. 1721, December 2017, http://www.econ.jku.at/papers/2017/wp1721.pdf

Abstract: This contribution examines the effect of advantageous inequity on performance using data from top-level penalty kicking in soccer. Results indicate that, on average, professionals do not perform worse when they experience unfair advantages. However, we find a negative effect of advantageous inequity in situations where success is less important.

JEL-Code: C93, D91, Z29
Keywords: advantageous inequity;  guilt;  self-serving bias;  fairness;  performance

The Minimum Wage, EITC, and Criminal Recidivism: The wage effect, drawing at least some ex-offenders into the legal labor market, dominates any reduced employment in this population due to the minimum wage

The Minimum Wage, EITC, and Criminal Recidivism. Amanda Y. Agan and Michael D. Makowsky (January 5, 2018). Available at SSRN: https://ssrn.com/abstract=3097203

Abstract: For recently released prisoners, the minimum wage and the availability of state Earned Income Tax Credits (EITCs) can influence both their ability to find employment and their potential legal wages relative to illegal sources of income, in turn affecting the probability they return to prison. Using administrative prison release records from nearly six million offenders released between 2000 and 2014, we use a difference-in-differences strategy to identify the effect of over two hundred state and federal minimum wage increases, as well as 21 state EITC programs, on recidivism. We find that the average minimum wage increase of 8% reduces the probability that men and women return to prison within 1 year by 2%. This implies that on average the wage effect, drawing at least some ex-offenders into the legal labor market, dominates any reduced employment in this population due to the minimum wage. These reductions in re-convictions are observed for the potentially revenue generating crime categories of property and drug crimes; prison reentry for violent crimes are unchanged, supporting our framing that minimum wages affect crime that serves as a source of income. The availability of state EITCs also reduces recidivism, but only for women. Given that state EITCs are predominantly available to custodial parents of minor children, this asymmetry is not surprising. Framed within a simple model where earnings from criminal endeavors serve as a reservation wage for ex-offenders, our results suggest that the wages of crime are on average higher than comparable opportunities for low-skilled labor in the legal labor market.

Keywords: criminal recidivism, minimum wage, earned income tax credit