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Learning and occupational sorting

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  • Jonathan James

Abstract

This paper develops and estimates a model of occupational choice and learning that allows for correlated learning across occupation specificabilities. In the labor market, workers learn about their potential outcomes in all occupations, not just their current occupation. Based on what they learn, workers engage in directed search across occupations. The estimates indicate that sorting occurs in multiple dimensions. Workers discovering a low ability in their current occupation are significantly more likely to move to a new occupation. At the same time, workers discovering a high ability in some occupations are more likely to move up the occupational ladder into managerial occupations. By age 28 this sorting process leads to an aggregate increase in wages similar to what would occur if all workers were endowed with an additional year of education.

Suggested Citation

  • Jonathan James, 2012. "Learning and occupational sorting," Working Papers (Old Series) 1225, Federal Reserve Bank of Cleveland.
  • Handle: RePEc:fip:fedcwp:1225
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    References listed on IDEAS

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    Keywords

    Labor market; Occupational training;

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