Career and Skill Formation: A Dynamic Occupational Choice Model with Multidimensional Skills
AbstractThe goal of the paper is two-folds. First, I construct and estimate a dynamic structural occupational choice model at the three-digit classification level, in which different occupations involve different mix of tasks. Second, I conduct a counterfactual simulation using the estimated model, to quantify the effects of progressive income tax on post-schooling human capital investment and occupational choices. In the model, various skills are acquired through learning-by-doing, depending on the tasks of the experienced occupations. The key feature of the model is that, unlike occupation specific human capital, the acquired skills can be partly transferred to other occupations. Hence, some of low skill occupations can be viewed as “stepping stone” to better occupations. The structural parameters of the model are estimated using the occupational characteristics in the Dictionary of Occupational Titles and the work history in the National Longitudinal Survey of Youth 79. The results of a counterfactual simulation in the estimated model indicate that switching to a flat income tax encourages mobility to highpaying occupations and accelerates human capital accumulation. A drawback of the tax code change is an increased inequality between educational groups.
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Bibliographic InfoPaper provided by McMaster University in its series Department of Economics Working Papers with number 2007-02.
Length: 38 pages
Date of creation: Feb 2007
Date of revision:
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More information through EDIRC
Occupational Choice; Human Capital; Income Tax;
Other versions of this item:
- Shintaro Yamaguchi, 2007. "Career and Skill Formation: A Dynamic Occupational Choice Model With Multidimensional Skills," 2007 Meeting Papers 729, Society for Economic Dynamics.
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
- J62 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Job, Occupational and Intergenerational Mobility; Promotion
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-02-17 (All new papers)
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