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Human Capital, Uncertain Wage Distributions, and Educational and Occupational Choices


  • Mattila, J. Peter
  • Orazem, Peter


This study develops a model of occupational and educational choices. Individuals are assumed to choose careers based on expected utility maximization, given uncertainty concerning future earnings. The model directly leads to estimable equations relating career choices to the moments of occupational earnings distributions. The authors report maximum likelihood estimates using a sample of high school graduates from Maryland school districts, 1951-69. The eight observed career choices respond as expected to the first and second moments of the earnings distribution and to a measure of school quality. Reasonable estimates of human capital production and supply elasticities are obtained for the career choices.

Suggested Citation

  • Mattila, J. Peter & Orazem, Peter, 1991. "Human Capital, Uncertain Wage Distributions, and Educational and Occupational Choices," Staff General Research Papers Archive 10841, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:10841

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    References listed on IDEAS

    1. Boehlje, Michael, 1996. "Industrialization of Agriculture: What are the Implications?," Choices, Agricultural and Applied Economics Association, vol. 11(1).
    2. Milgrom, Paul & Shannon, Chris, 1994. "Monotone Comparative Statics," Econometrica, Econometric Society, vol. 62(1), pages 157-180, January.
    3. John A. Miranowski & Bruce A. Babcock, 2004. "Genetic Information in Agricultural Productivity and Product Development," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 73-87.
    4. Bennett, Richard & Blaney, Ralph, 2002. "Social consensus, moral intensity and willingness to pay to address a farm animal welfare issue," Journal of Economic Psychology, Elsevier, vol. 23(4), pages 501-520, August.
    5. Robert Innes, 1999. "Self-Policing and Optimal Law Enforcement When Violator Remediation is Valuable," Journal of Political Economy, University of Chicago Press, vol. 107(6), pages 1305-1325, December.
    6. Boland, Philip J. & Proschan, Frank, 1988. "Multivariate arrangement increasing functions with applications in probability and statistics," Journal of Multivariate Analysis, Elsevier, vol. 25(2), pages 286-298, May.
    7. Jayson L. Lusk & John A. Fox & Ted C. Schroeder & James Mintert & Mohammad Koohmaraie, 2001. "In-Store Valuation of Steak Tenderness," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 539-550.
    8. Milgrom, Paul & Roberts, John, 1996. "The LeChatelier Principle," American Economic Review, American Economic Association, vol. 86(1), pages 173-179, March.
    9. Garen, John, 1988. "Compensating Wage Differentials and the Endogeneity of Job Riskiness," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 9-16, February.
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    Cited by:

    1. Konrad, Kai A. & Kovenock, Dan, 2012. "The lifeboat problem," European Economic Review, Elsevier, vol. 56(3), pages 552-559.
    2. Felderer, Bernhard & Drost, André, 2000. "Cyclical Occupational Choice in a Model with Rational Wage Expectations and Perfect Occupational Mobility," Economics Series 81, Institute for Advanced Studies.
    3. Yu, Li & Orazem, Peter F. & Jolly, Robert W., 2014. "Entrepreneurship over the business cycle," Economics Letters, Elsevier, vol. 122(2), pages 105-110.
    4. Polachek, Solomon W., 2008. "Earnings Over the Life Cycle: The Mincer Earnings Function and Its Applications," Foundations and Trends(R) in Microeconomics, now publishers, vol. 4(3), pages 165-272, April.

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