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Career and Skill Formation: A Dynamic Occupational Choice Model With Multidimensional Skills

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  • Shintaro Yamaguchi

    (McMaster University)

Abstract

The objective of the paper is to construct and estimate a dynamic structural model of schooling and occupational choice at the three-digit classification level, in which different occupations involve different mix of tasks. In the model, occupations are characterized by complexity of various tasks. Unlike occupational specific human capital, skills used in one occupation help a worker to enter a new occupation, depending on the similarity of the tasks of the two. Individuals build up their skills in low-paying occupations that provide relevant experience before they enter a high-paying occupation. Hence, low skill occupations can be viewed as “stepping stone” to better occupations. The structural parameters of the model are estimated using the occupational characteristics in the Dictionary of Occupational Titles and the work history in the National Longitudinal Survey of Youth 79. I find that the model does a good job of fitting the data on occupational choices: individuals gradually move from low-skill occupations to high-skill occupations.

Suggested Citation

  • Shintaro Yamaguchi, 2007. "Career and Skill Formation: A Dynamic Occupational Choice Model With Multidimensional Skills," 2007 Meeting Papers 729, Society for Economic Dynamics.
  • Handle: RePEc:red:sed007:729
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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