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A Dynamic Analysis of Educational Attainment, Occupational Choices, and Job Search

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  • Sullivan, Paul

Abstract

This paper examines career choices using a dynamic structural model that nests a job search model within a human capital model of occupational and educational choices. Individuals in the model decide when to attend school and when to move between firms and occupations over the course of their career. Workers search for suitable wage and non-pecuniary match values at firms across occupations given their heterogeneous skill endowments and preferences for employment in each occupation. Over the course of their careers workers endogenously accumulate firm and occupation specific human capital that affects wages differently across occupations. The parameters of the model are estimated with simulated maximum likelihood using data from the 1979 cohort of the National Longitudinal Survey of Youth. The structural parameter estimates reveal that both self-selection in occupational choices and mobility between firms account for a much larger share of total earnings and utility than the combined effects of firm and occupation specific human capital. Eliminating the gains from matching between workers and occupations would reduce total wages by 31%, eliminating the gains from job search would reduce wages by 19%, and eliminating the effects of firm and occupation specific human capital on wages would reduce wages by only 2.8%.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 4590.

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Date of creation: Jun 2007
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Handle: RePEc:pra:mprapa:4590

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Keywords: occupational choice; job search; human capital; dynamic programming models;

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Citations

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Cited by:
  1. Keane, Michael P. & Todd, Petra E. & Wolpin, Kenneth I., 2011. "The Structural Estimation of Behavioral Models: Discrete Choice Dynamic Programming Methods and Applications," Handbook of Labor Economics, Elsevier.
  2. Jerome Adda & Christian Dustmann & Costas Meghir & Jean-Marc Robin, 2013. "Career Progression, Economic Downturns, and Skills," Cowles Foundation Discussion Papers 1889, Cowles Foundation for Research in Economics, Yale University.
  3. Adda & Dustmann, 2004. "Career Progression and Formal versus on the Job Training," Econometric Society 2004 North American Winter Meetings 492, Econometric Society.
  4. Erhan Artuc, 2009. "Intergenerational Effects of Trade Liberalization," 2009 Meeting Papers 870, Society for Economic Dynamics.
  5. A Aggarwal & R Freguglia & G Johnes & G Spricigo, 2011. "Education and labour market outcomes : evidence from India," Working Papers 615663, Lancaster University Management School, Economics Department.
  6. Sullivan, Paul, 2006. "Interpolating Value Functions in Discrete Choice Dynamic Programming Models," MPRA Paper 864, University Library of Munich, Germany.
  7. Jonathan James, 2011. "Ability matching and occupational choice," Working Paper 1125, Federal Reserve Bank of Cleveland.
  8. Ronni Pavan & Josh Kinsler, 2012. "The Specificity of General Human Capital: Evidence from College Major Choice," 2012 Meeting Papers 1036, Society for Economic Dynamics.
  9. Peter Arcidiacono & Paul B. Ellickson, 2011. "Practical Methods for Estimation of Dynamic Discrete Choice Models," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 363-394, 09.
  10. Paul Sullivan & Ted To, 2011. "Search and Non-Wage Job Characteristics," Working Papers 449, U.S. Bureau of Labor Statistics.

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