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Ability matching and occupational choice

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  • Jonathan James

Abstract

This paper develops and estimates an individual model of occupational choice and learning that allows for correlated learning across occupation-specific abilities. As an individual learns about their occupation-specific ability in one occupation, this experience will be broadly informative about their abilities in all occupations. Workers continually process their entire history of information, which they use to determine when to change careers, as well as which new career to go to. Endogenizing information in this manner has been computationally prohibitive in the past. I estimate the model in an innovative way using the Expectation and Maximization (EM) algorithm. The model is estimated on the National Longitudinal Survey of Youth 1997. The estimates suggest that both direct and indirect learning play an important role in early career wage growth, with those with the lowest levels of education achieving the largest increases.

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  • Jonathan James, 2011. "Ability matching and occupational choice," Working Papers (Old Series) 1125, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwp:1125
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    References listed on IDEAS

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    Cited by:

    1. Limor Golan & Carl Sanders & Jonathan James, 2019. "What Explains the Racial Gaps in Task Assignment and Pay Over the Life-Cycle?," 2019 Meeting Papers 320, Society for Economic Dynamics.
    2. Loviglio, Annalisa, 2023. "School Quality beyond Test Scores: The Role of Schools in Shaping Educational Outcomes," IZA Discussion Papers 16111, Institute of Labor Economics (IZA).
    3. repec:ags:aaea22:335435 is not listed on IDEAS
    4. Peter Arcidiacono & Esteban Aucejo & Arnaud Maurel & Tyler Ransom, 2025. "College Attrition and the Dynamics of Information Revelation," Journal of Political Economy, University of Chicago Press, vol. 133(1), pages 53-110.

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    Occupational training;

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