PUB - Publikationen an der Universität Bielefeld

Human capital theory, one of the cornerstones of modern labor and personnel economics, posits that individual salaries are a function of a person's skills and abilities. Irrespective of its undisputed theoretical importance and practical relevance, the empirical evidence on the impact of personality traits and characteristics on salaries, however, remains limited and inconclusive because most of the existing literature is based on self-reported questionnaire responses. Therefore, we include in our estimations not only the ‘traditional’ measures of a person's human capital, but also analyze the impact of an individual's personality traits that have so far been mostly neglected in the context of income determination. We avoid the ‘subjectivity bias’ that has been criticized in the previous literature and use an unbalanced panel including approximately 200 professional basketball players from the National Basketball Association in the four seasons 2003/2004–2006/2007. With this kind of secondary data we estimate standard Mincer-type earnings functions as well as more advanced quantile regressions. Our findings document a statistically significant and economically considerable impact of ‘mental strength’ on player salaries.