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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.

Suggested Citation

  • Jonathan James, 2011. "Ability matching and occupational choice," Working Paper 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. Tyler Ransom & Esteban Aucejo & Arnaud Maurel & Peter Arcidiacono, 2014. "College Attrition and the Dynamics of Information Revelation," 2014 Meeting Papers 529, Society for Economic Dynamics.

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    Keywords

    Occupational training;

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