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The Influence of Higher Moments of Earnings Distributions on Career Decisions

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  • Flyer, Fredrick A

Abstract

A model where choice of occupation is sequential is applied to college graduates from the National Longitudinal Study of High School Class of 1972 to investigate how higher moments of occupational earnings distributions influence initial field of work. Individual specific life-cycle earnings projections that incorporate option values of occupational mobility are generated, and the relationship between these pay measures and choice of initial occupation is explored within a multinomial logit framework. The findings indicate a strong positive relationship between these earnings predictions and the likelihood that college graduates enter an occupation. Copyright 1997 by University of Chicago Press.

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  • Flyer, Fredrick A, 1997. "The Influence of Higher Moments of Earnings Distributions on Career Decisions," Journal of Labor Economics, University of Chicago Press, vol. 15(4), pages 689-713, October.
  • Handle: RePEc:ucp:jlabec:v:15:y:1997:i:4:p:689-713
    DOI: 10.1086/209842
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    References listed on IDEAS

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    Cited by:

    1. Humburg, M., 2014. "Personality and field of study choice," Research Memorandum 002, Maastricht University, Graduate School of Business and Economics (GSBE).
    2. Xia, Xiaoyu, 2016. "Forming wage expectations through learning: Evidence from college major choices," Journal of Economic Behavior & Organization, Elsevier, vol. 132(PA), pages 176-196.
    3. Bougherara, Douadia & Friesen, Lana & Nauges, Céline, 2022. "Risk-taking and skewness-seeking behavior in a demographically diverse population," Journal of Economic Behavior & Organization, Elsevier, vol. 201(C), pages 83-104.
    4. Hartog, Joop & Vijverberg, Wim P.M., 2007. "On compensation for risk aversion and skewness affection in wages," Labour Economics, Elsevier, vol. 14(6), pages 938-956, December.
    5. Adeline Delavande & Basit Zafar, 2014. "University choice: the role of expected earnings, non-pecuniary outcomes, and financial constraints," Staff Reports 683, Federal Reserve Bank of New York.
    6. Nikoloz Kudashvili & Gega Todua, 2022. "Information, Perceived Returns and College Major Choices," CERGE-EI Working Papers wp717, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    7. Montmarquette, Claude & Cannings, Kathy & Mahseredjian, Sophie, 2002. "How do young people choose college majors?," Economics of Education Review, Elsevier, vol. 21(6), pages 543-556, December.
    8. Patnaik, Arpita & Venator, Joanna & Wiswall, Matthew & Zafar, Basit, 2022. "The role of heterogeneous risk preferences, discount rates, and earnings expectations in college major choice," Journal of Econometrics, Elsevier, vol. 231(1), pages 98-122.
    9. Martin Humburg, 2017. "Personality and field of study choice in university," Education Economics, Taylor & Francis Journals, vol. 25(4), pages 366-378, July.
    10. Lin, Chung-cheng, 2004. "Bonding, shirking and adverse selection," Economic Modelling, Elsevier, vol. 21(3), pages 545-560, May.
    11. Grove, Wayne A. & Jetter, Michael & Papps, Kerry L., 2018. "Career Lotto: Labor Supply in Winner-Take-All Markets," IZA Discussion Papers 12012, Institute of Labor Economics (IZA).
    12. Matthew Wiswall & Basit Zafar, 2016. "Human Capital Investments and Expectations about Career and Family," NBER Working Papers 22543, National Bureau of Economic Research, Inc.
    13. Minicozzi, Alexandra, 2005. "The short term effect of educational debt on job decisions," Economics of Education Review, Elsevier, vol. 24(4), pages 417-430, August.

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