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Estimation of an Occupational Choice Model when Occupations are Misclassified

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  • Sullivan, Paul

Abstract

This paper examines occupational choices using a discrete choice model that accounts for the fact that self-reported occupation data is measured with error. Despite evidence from validation studies which suggests that there is a substantial amount of measurement error in self-reported occupations, existing research has not corrected for classification error when estimating models of occupational choice. This paper develops a panel data model of occupational choices that corrects for misclassification in occupational choices and measurement error in occupation-specific work experience variables. The model is used to estimate the extent of measurement error in self-reported occupation data and quantify the bias that results from ignoring measurement error in occupation codes when studying the determinants of occupational choices and estimating the effects of occupation-specific human capital on wages. The parameter estimates reveal that 9% of occupational choices in the 1979 cohort of the National Longitudinal Survey of Youth are misclassified. Ignoring misclassification biases the median parameter in the occupational choice model by 25%.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 862.

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Date of creation: Nov 2006
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Handle: RePEc:pra:mprapa:862

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Keywords: occupational choice; misclassification; simulation methods;

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Citations

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Cited by:
  1. Sullivan, Paul, 2006. "Empirical Evidence on Occupation and Industry Specific Human Capital," MPRA Paper 863, University Library of Munich, Germany.
  2. Shintaro Yamaguchi, 2011. "Tasks and Heterogeneous Human Capital," Department of Economics Working Papers 2011-06, McMaster University.
  3. Arndt Werner & Johanna Gast & Sascha Kraus, 2014. "The effect of working time preferences and fair wage perceptions on entrepreneurial intentions among employees," Small Business Economics, Springer, vol. 43(1), pages 137-160, June.
  4. Barbara Mueller & Juerg Schweri, 2012. "The returns to occupation-specific human capital - Evidence from mobility after training," Economics of Education Working Paper Series 0081, University of Zurich, Institute for Strategy and Business Economics (ISU).
  5. Shintaro Yamaguchi, 2009. "Formation of Heterogeneous Skills and Wage Growth," Department of Economics Working Papers 2009-13, McMaster University.
  6. Shintaro Yamaguchi, 2007. "The Effect of Match Quality and Specific Experience on Career Decisions and Wage Growth," Department of Economics Working Papers 2007-01, McMaster University.

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