Youth unemployment and personality traits

This paper investigates the relationship between personality traits in adolescence and education and labour market choices. In particular, we investigate the impact of locus of control, effort and diligence, and self-esteem on the risk of youths being unemployed (sometimes referred to as NEET ("Not in Education, Employment or Training"), assuming unconfoundedness. Thus, our focus is on early dropouts from both education and the labour market at age 18-20. We use matching methods to control for a rich set of adolescent and family characteristics by estimating the treatment effects, conditional on unconfoundedness, of multiple personality traits at the same time (Wooldridge, Econometric Analysis of Cross Section and Panel Data, 2010). Finally, we use the methodology proposed by Altonji (J Polit Economy 113:151-184, 2005) that involves making hypotheses about the correlation between the unobservables and observables that determine the outcomes and the unobservables that influence personality. Our results show that individuals that display low effort and diligence, low self-esteem, and external locus of control are estimated to be more likely to drop out of education and employment.