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Matching Skills and Exploring Occupations


  • Satoshi Tanaka

    (University of Minnesota)

  • Jae Song

    (Social Security Administration)

  • David Wiczer

    (University of Minnesota)

  • Burhanettin Kuruscu

    (University of Toronto)

  • Fatih Guvenen

    (University of Minnesota)


We study how individuals match their skills with an occupation's demands as they choose a career. With data on individuals' test scores for multiple types of skills and work histories, we have a rich description of this process. We quantify the quality of one's occupational match and how it evolves over the life cycle and with successive occupational moves. We propose and estimate a model in which occupational mobility allows individuals to discover their learning abilities along these dierent skill dimensions. The model delivers predictions for occupational sorting, which then allows us to use indirect inference to estimate returns to skills in occupations despite the sorting that plagues reduced form attempts at similar estimation. Furthermore, we gain insights into why incomes diverge over the life cycle, as match quality has long-term implications here, and we can use the model to analyze policies that affect occupational mobility.

Suggested Citation

  • Satoshi Tanaka & Jae Song & David Wiczer & Burhanettin Kuruscu & Fatih Guvenen, 2011. "Matching Skills and Exploring Occupations," 2011 Meeting Papers 1131, Society for Economic Dynamics.
  • Handle: RePEc:red:sed011:1131

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    5. Satyajit Chatterjee & Dean Corbae & Makoto Nakajima & José-Víctor Ríos-Rull, 2007. "A Quantitative Theory of Unsecured Consumer Credit with Risk of Default," Econometrica, Econometric Society, vol. 75(6), pages 1525-1589, November.
    6. Timothy J. Kehoe & David K. Levine, 1993. "Debt-Constrained Asset Markets," Review of Economic Studies, Oxford University Press, vol. 60(4), pages 865-888.
    7. Hart, Oliver D., 1975. "On the optimality of equilibrium when the market structure is incomplete," Journal of Economic Theory, Elsevier, vol. 11(3), pages 418-443, December.
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