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On the Dynamics of Occupational Choice, Human Capital Accumulation and Growth


  • Maximiliano Dvorkin

    (Federal Reserve Bank of St. Louis)

  • Alexander Monge-Nara

    (Federal Reserve Bank of St. Louis)


We develop a tractable dynamic Roy model in which workers in every period choose occupations to maximize their lifetime utility. In our setting, the worker’s human capital levels for each occupation evolves according to his labor market choices, costs for switching occupations, and occupation-specific productivity shocks. We characterize the allocation of workers to jobs and the evolution of individual and aggregate human capital and show that the long-term growth rate of the economy endogenously depends on worker’s occupational choice, self-selection and human capital accumulation, providing a new theory of endogenous growth. Then, we use our setting to study the effects of automation and labor-saving technical change on occupational choice, income inequality, job polarization and growth.

Suggested Citation

  • Maximiliano Dvorkin & Alexander Monge-Nara, 2019. "On the Dynamics of Occupational Choice, Human Capital Accumulation and Growth," 2019 Meeting Papers 1461, Society for Economic Dynamics.
  • Handle: RePEc:red:sed019:1461

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