Matching Skills and Exploring Occupations

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.