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On the Importance of Social Status for Occupational Sorting

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  • Paweł Gola

Abstract

Models of self-selection predict that occupations with flat wage schedules attract workers of lower average ability. However, in certain prominent occupations such as academia and the civil service, wages are flat yet the average skill level is high. In this paper, I examine whether social status concerns can explain this puzzle. I find that within-occupation status allows flat wage occupations to attract predominantly high-skilled workers, but only at the cost of attracting few workers overall. If, however, workers care about both within- and between-occupation status then occupations paying flat wages can be arbitrarily large and attract workers of high average skill. I conclude that within- and between-occupation status concerns act as complements.

Suggested Citation

  • Paweł Gola, 2024. "On the Importance of Social Status for Occupational Sorting," The Economic Journal, Royal Economic Society, vol. 134(661), pages 2009-2040.
    • Handle: RePEc:oup:econjl:v:134:y:2024:i:661:p:2009-2040.
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    File URL: http://hdl.handle.net/10.1093/ej/uead119
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    References listed on IDEAS

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    1. Ettore Damiano & Hao Li & Wing Suen, 2010. "First In Village Or Second In Rome?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(1), pages 263-288, February.
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    4. de Bartolome, Charles A M, 1990. "Equilibrium and Inefficiency in a Community Model with Peer Group Effects," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 110-133, February.
    5. Dolton, P J & Makepeace, G H & Van Der Klaauw, W, 1989. "Occupational Choice and Earnings Determination: The Role of Sample Selection and Non-pecuniary Factors," Oxford Economic Papers, Oxford University Press, vol. 41(3), pages 573-594, July.
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    Cited by:

    1. Isabel Melguizo & Sergio Tovar, 2025. "Effort Provision in Peer Groups," Working Papers DTE 646, CIDE, División de Economía.
    2. Gola, Paweł, 2025. "The pond dilemma with heterogeneous relative concerns," Journal of Public Economics, Elsevier, vol. 249(C).

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