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Occupational Self-Selection in a Labor Market with Moral Hazard

  • Demiralp, Berna

This paper presents a model of occupational choice in a labor market characterized by moral hazard. The model demonstrates that in such a labor market, workers' occupational choices are determined by not only their comparative advantage but also their effort decisions in each occupation. The estimation results, based on data from the National Longitudinal Survey of Youth, suggest that workers' self-selection into white collar and blue collar occupations leads to higher wages and lower dismissal rates in both occupations. Furthermore, analysis results reveal that these effects of self-selection diminish as the labor market becomes increasingly characterized by moral hazard.

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File URL: https://mpra.ub.uni-muenchen.de/2314/1/MPRA_paper_2314.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2314.

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Date of creation: Mar 2007
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Handle: RePEc:pra:mprapa:2314
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  1. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54.
  2. George J. Borjas, 1987. "Self-Selection and the Earnings of Immigrants," NBER Working Papers 2248, National Bureau of Economic Research, Inc.
  3. Flinn, Christopher J., 1991. "Equilibrium Wage and Dismissal Processes," Working Papers 91-15, C.V. Starr Center for Applied Economics, New York University.
  4. Jovanovic, Boyan & Moffitt, Robert, 1988. "An Estimate Of A Sectoral Model Of Labor Mobility," Working Papers 88-32, C.V. Starr Center for Applied Economics, New York University.
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  13. repec:eme:rlepps:v:18:y:1999:i:1999:p:177-242 is not listed on IDEAS
  14. Eric D. Gould, 2002. "Rising Wage Inequality, Comparative Advantage, and the Growing Importance of General Skills in the United States," Journal of Labor Economics, University of Chicago Press, vol. 20(1), pages 105-147, January.
  15. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
  16. Neal, Derek, 1999. "The Complexity of Job Mobility among Young Men," Journal of Labor Economics, University of Chicago Press, vol. 17(2), pages 237-61, April.
  17. Heckman, James J & Sedlacek, Guilherme, 1985. "Heterogeneity, Aggregation, and Market Wage Functions: An Empirical Model of Self-selection in the Labor Market," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1077-1125, December.
  18. Farber, Henry S, 1994. "The Analysis of Interfirm Worker Mobility," Journal of Labor Economics, University of Chicago Press, vol. 12(4), pages 554-93, October.
  19. Michael P. Keane & Kenneth I. Wolpin, 1995. "The career decisions of young men," Working Papers 559, Federal Reserve Bank of Minneapolis.
  20. Sauer, R.M., 1996. "Job Mobility and the Market for Lawyers," Papers 28-96, Tel Aviv.
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