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

  • Shintaro Yamaguchi

    (McMaster University)

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.

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Paper provided by Society for Economic Dynamics in its series 2007 Meeting Papers with number 729.

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Date of creation: 2007
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Handle: RePEc:red:sed007:729
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  1. Iourii Manovskii & Gueorgui Kambourov, 2004. "Occupational Specificity of Human Capital," 2004 Meeting Papers 197, Society for Economic Dynamics.
  2. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352.
  3. Rubinstein, Yona & Weiss, Yoram, 2006. "Post Schooling Wage Growth: Investment, Search and Learning," Handbook of the Economics of Education, Elsevier.
  4. Henry S. Farber & Robert Gibbons, 1991. "Learning and Wage Dynamics," NBER Working Papers 3764, National Bureau of Economic Research, Inc.
  5. Ronni Pavan, 2006. "Career Choice and Wage Growth," 2006 Meeting Papers 504, Society for Economic Dynamics.
  6. Boyan Jovanovic & Yaw Nyarko, 1996. "Stepping Stone Mobility," NBER Working Papers 5651, National Bureau of Economic Research, Inc.
  7. Donghoon Lee, 2005. "An Estimable Dynamic General Equilibrium Model Of Work, Schooling, And Occupational Choice," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(1), pages 1-34, 02.
  8. Michael P. Keane & Kenneth I. Wolpin, 1995. "The career decisions of young men," Working Papers 559, Federal Reserve Bank of Minneapolis.
  9. Gathmann, Christina & Schönberg, Uta, 2006. "How General Is Specific Human Capital?," IZA Discussion Papers 2485, Institute for the Study of Labor (IZA).
  10. Robert Gibbons & Michael Waldman, 2004. "Task-Specific Human Capital," American Economic Review, American Economic Association, vol. 94(2), pages 203-207, May.
  11. Ingram, Beth F. & Neumann, George R., 2006. "The returns to skill," Labour Economics, Elsevier, vol. 13(1), pages 35-59, February.
  12. James J. Heckman & Lance Lochner & Christopher Taber, 1998. "Tax Policy and Human Capital Formation," NBER Working Papers 6462, National Bureau of Economic Research, Inc.
  13. Robert H. Topel & Michael P. Ward, 1988. "Job Mobility and the Careers of Young Men," NBER Working Papers 2649, National Bureau of Economic Research, Inc.
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