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Occupational Choice with Endogenous Spillovers

Author

Listed:
  • Facundo Albornoz
  • Antonio Cabrales
  • Esther Hauk

Abstract

We study a model that integrates productive and socialising efforts with occupational choice, and endogenous spillovers. We show that more talented individuals work harder and contribute more to externalities, but also have incentives to segregate. Average socialising increases the productivity of the occupation. The size of an occupation grows with its synergies. Individuals underinvest in productive and socialising effort, and sort themselves inefficiently into occupations. We derive the optimal subsidy for sorting into different occupations. Finally, we derive a rule to identify overpopulated sectors and establish the connection between inequality of talents, socialising, productive efforts and occupation size.

Suggested Citation

  • Facundo Albornoz & Antonio Cabrales & Esther Hauk, 2019. "Occupational Choice with Endogenous Spillovers," The Economic Journal, Royal Economic Society, vol. 129(621), pages 1953-1970.
    • Handle: RePEc:oup:econjl:v:129:y:2019:i:621:p:1953-1970.
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    File URL: http://hdl.handle.net/10.1111/ecoj.12634
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    Cited by:

    1. Gradstein, Mark & Justman, Moshe, 2019. "Cultural interaction and economic development: An overview," European Journal of Political Economy, Elsevier, vol. 59(C), pages 243-251.
    2. Ghazala Azmat & Manuel Bagues & Antonio Cabrales & Nagore Iriberri, 2018. "What you don’t know... Can’t hurt you? A natural field experiment on relative performance feedback in higher education," Sciences Po publications info:hdl:2441/5r0qo9lp3v9, Sciences Po.
    3. Zenou, Yves & Boucher, Vincent & Tumen, Semih & Vlassopoulos, Michael & Wahba, Jackline, 2020. "Ethnic Mixing in Early Childhood: Evidence from a Randomized Field Experiment and a Structural Model," CEPR Discussion Papers 15528, C.E.P.R. Discussion Papers.
    4. Vincent Boucher & Carlo L. Del Bello & Fabrizio Panebianco & Thierry Verdier & Yves Zenou, 2023. "Education Transmission and Network Formation," Journal of Labor Economics, University of Chicago Press, vol. 41(1), pages 129-173.
    5. Hong, Jieying & Zhang, Rui, 2021. "Socialization, job search and integration," Economic Modelling, Elsevier, vol. 101(C).
    6. Tenev, Anastas P., 2024. "“Friends Are Thieves of Time”: Heuristic attention sharing in stable friendship networks," Journal of Economic Behavior & Organization, Elsevier, vol. 224(C), pages 785-809.
    7. Pi, Zhenyang & Wang, Ke, 2025. "Does lower electric vehicle production cost spur traditional automaker electrification? Spillovers of cost-reduction investments," Resource and Energy Economics, Elsevier, vol. 81(C).
    8. Ghazala Azmat & Manuel Bagues & Antonio Cabrales & Nagore Iriberri, 2019. "What You Don’t Know…Can’t Hurt You? A Natural Field Experiment on Relative Performance Feedback in Higher Education," Management Science, INFORMS, vol. 65(8), pages 3714-3736, August.

    More about this item

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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