Analyzing the gender pay gap in transition economies: How much does personality matter?

We estimate the personality-earnings relation in Russia, Armenia and Kazakhstan and examine how much of the gender pay gap can be explained by locus of control (LOC). We use data from an employee survey conducted in 2005 and employ Oaxaca-Blinder-Neumark decomposition. Among Russian and Armenian survey participants, men are more likely to exhibit an internal LOC (attribute success to own actions), and individuals with an internal LOC tend to earn more than individuals who attribute success to fate or other external forces (exhibit an external LOC). In Kazakhstan, gender differences in LOC and the estimated effects of LOC on earnings are small and statistically insignificant. Gender differences in LOC explain 5.5 percent of the gender pay gap in Armenia, 7 percent in Russia, and 2.7 percent in Kazakhstan. Our findings suggest that personality plays an important role in explaining the pay gap.