Do Personality Differences Explain the Gender Pay Gap? Evidence from Three Transition Economies

Abstract

We use data from an employee survey conducted in Russia, Armenia and Kazakhstan to study the contribution of gender differences in personality to gender differences in pay. In particular, we focus on the influence of locus of control (LOC) because there is evidence from studies conducted in developed market economies suggesting that individuals with an internal LOC (i.e. those who believe that their success is determined by own actions) demonstrate greater initiative and better performance than individuals with an external LOC (i.e. those who believe that their success is determined by external forces). Similar to these studies, we find that among the participants of our survey, men are more likely to exhibit an internal LOC, while women are more likely to have an external LOC. Gender differences in LOC are particularly large among Russian employees, while very small in the Kazakhstan sample. Additionally, we find that an internal LOC is associated with higher pay for both male and female participants of the Armenian and Russian surveys. In Kazakhstan, the estimated effects of LOC are positive, but small and very noisy. The results from the Oaxaca-Blinder-Neumark wage gap decomposition show that among the participants of the surveys, gender differences in LOC explain 5.5% of the gender pay gap in Armenia, 7% of the gap in Russia, and 2.7% of the gap in Kazakhstan. We suggest possible explanations for the observed cross-country differences and discuss policy implications.