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Occupational Self-Selection in a Labor Market with Moral Hazard

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  • Demiralp, Berna

Abstract

This paper presents a model of occupational choice in a labor market characterized by moral hazard. The model demonstrates that in such a labor market, workers' occupational choices are determined by not only their comparative advantage but also their effort decisions in each occupation. The estimation results, based on data from the National Longitudinal Survey of Youth, suggest that workers' self-selection into white collar and blue collar occupations leads to higher wages and lower dismissal rates in both occupations. Furthermore, analysis results reveal that these effects of self-selection diminish as the labor market becomes increasingly characterized by moral hazard.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2314.

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Date of creation: Mar 2007
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Handle: RePEc:pra:mprapa:2314

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Keywords: occupational choice; moral hazard; self-selection; dismissals;

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