Interpersonal Styles and Labor Market Outcomes

Interpersonal interactions are important for understanding individual labor-market outcomes. This paper develops a framework to understand the role of interpersonal interactions in the labor market including task assignment and wages. Interactions between people are modeled as a trade-off between caring and directness, both of which can be either beneficial or detrimental. Caring is needed to establish cooperation; directness is needed to provide information in a non-evasive manner. An assignment model shows that people are most productive in jobs that match their style and earn less when they have to shift to other jobs. Estimates of the assignment model show that this negative effect results from an oversupply of one attribute relative to the other. In addition, evidence is presented indicating that higher levels of sociability at young ages are associated with assignment to jobs emphasizing interpersonal interactions. The returns to interpersonal interactions are consistent with the assignment model.