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Occupational Self-Selection in a Labor Market with Moral Hazard

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  • Demiralp, Berna

Abstract

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.

Suggested Citation

  • Demiralp, Berna, 2007. "Occupational Self-Selection in a Labor Market with Moral Hazard," MPRA Paper 2314, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:2314
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    References listed on IDEAS

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    Cited by:

    1. repec:bla:manchs:v:85:y:2017:i:3:p:295-319 is not listed on IDEAS
    2. Okoampah, Sarah, 2016. "Cohort size effects on wages, working status, and work time," Ruhr Economic Papers 629, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

    More about this item

    Keywords

    occupational choice; moral hazard; self-selection; dismissals;

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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