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The Wealth Effect in Occupational Choice

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  • Yoram Weiss

Abstract

The purpose of this paper is to indicate regularities in the area of occupational choice using income-leisure analysis. A simple one-period model is used to examine the effect of changes in nonhuman and human wealth on the choice of an occupation. It is argued that under certainty: An increase in nonwage income will increase the propensity to choose pleasant low-paying work activities. An increase in human capital will also induce a choice of pleasant work activities if the income effect is dominant. Under conditions of uncertainty an increase in nonwage income will tend to encourage the choice of risky high-paying work activities if their monetary returns are uncertain. If the nonmonetary returns of an occupation are uncertain the propensity to choose it will tend to decrease with wealth. Finally, an increase in human capital is likely to discourage the choice of occupations with risky monetary returns.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0028.

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Date of creation: Jan 1974
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Publication status: published as International Economic Review, Vol. 17, no. 2 (1976): 292-307.
Handle: RePEc:nbr:nberwo:0028

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  1. Diamond, Peter A. & Stiglitz, Joseph E., 1974. "Increases in risk and in risk aversion," Journal of Economic Theory, Elsevier, vol. 8(3), pages 337-360, July.
  2. Keeney, Ralph L, 1973. "Risk Independence and Multiattributed Utility Functions," Econometrica, Econometric Society, vol. 41(1), pages 27-34, January.
  3. Weiss, Yoram, 1971. "Learning by doing and occupational specialization," Journal of Economic Theory, Elsevier, vol. 3(2), pages 189-198, June.
  4. Weiss, Yoram, 1972. "The Risk Element in Occupational and Educational Choices," Journal of Political Economy, University of Chicago Press, vol. 80(6), pages 1203-13, Nov.-Dec..
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Cited by:
  1. Fabio Maccheroni & Massimo Marinacci & Aldo Rustichini, 2008. "Social Decision Theory: Choosing within and between Groups," Carlo Alberto Notebooks 71, Collegio Carlo Alberto.
  2. Fershtman, Chaim & Weiss, Yoram, 1993. "Social Status, Culture and Economic Performance," Economic Journal, Royal Economic Society, vol. 103(419), pages 946-59, July.
  3. Rafael Lopes de Melo, 2012. "Firm Heterogeneity, Sorting and the Minimum Wage," 2012 Meeting Papers 611, Society for Economic Dynamics.
  4. Chaim Fershtman, 1993. "Social Status," Discussion Papers 1054, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Scott Stern, 1999. "Do Scientists Pay to Be Scientists?," NBER Working Papers 7410, National Bureau of Economic Research, Inc.
  6. Ernesto Villanueva, 2004. "Compensating wage differentials and voluntary job changes: Evidence from West Germany," Economics Working Papers 738, Department of Economics and Business, Universitat Pompeu Fabra.

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