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Choosing the Right Pond: Social Approval and Occupational Choice

  • Anandi Mani

    (Williams College)

  • Charles H. Mullin

    (Bates White)

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    We model the endogenous emergence of social perceptions about occupations and their impact on occupational choice. In particular, an individual's social approval increases with his community's perception of his skill in his chosen career. These perceptions vary across communities because individuals better assess the skill of those in occupations similar to their own. Such imperfect assessment can distort choices away from comparative advantage. When skill distributions differ across occupations and/or correlate positively, the community perceives one occupation more favorably. This favored sector experiences overcrowding, but misallocation occurs across both sectors. Furthermore, a positive skill correlation can produce multiple steady states.

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    Article provided by University of Chicago Press in its journal Journal of Labor Economics.

    Volume (Year): 22 (2004)
    Issue (Month): 4 (October)
    Pages: 835-862

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    Handle: RePEc:ucp:jlabec:v:22:y:2004:i:4:p:835-862
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    1. Jovanovic, Boyan, 1982. "Favorable Selection with Asymmetric Information," The Quarterly Journal of Economics, MIT Press, vol. 97(3), pages 535-39, August.
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    4. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-77, October.
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    6. Bisin, A. & Verdier, T., 1997. "On the Cultural Transmission of Preferences for Social Status," DELTA Working Papers 97-04, DELTA (Ecole normale supérieure).
    7. Galor, Oded & Zeira, Joseph, 1988. "Income Distribution and Macroeconomics," MPRA Paper 51644, University Library of Munich, Germany, revised 01 Sep 1989.
    8. Heckman, James J & Honore, Bo E, 1990. "The Empirical Content of the Roy Model," Econometrica, Econometric Society, vol. 58(5), pages 1121-49, September.
    9. George A. Akerlof, 1997. "Social Distance and Social Decisions," Econometrica, Econometric Society, vol. 65(5), pages 1005-1028, September.
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