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You get what you pay for: Incentives and Selection in the Education System

  • Dohmen Thomas
  • Falk Armin

    (ROA rm)

We analyse worker self-selection with a special focus on teachers. The point of the paper is that worker composition is generally endogenous, due to worker self-selection. In a first step we analyse lab experimental data to provide causal evidence on particular sorting patterns. This evidence sets the stage for our field data analysis, which focuses specifically on selection patterns of teachers. We find that teachers are more risk averse than employees in other professions, which indicates that relatively risk averse individuals sort into teaching occupations under the current system. Using survey measures on trust and reciprocity we also find that teachers trust more and are less negatively reciprocal than other employees. Finally, we establish differences in personality based on the Big Five concept.

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Paper provided by Maastricht University, Research Centre for Education and the Labour Market (ROA) in its series ROA Research Memorandum with number 002.

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Date of creation: 2010
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Handle: RePEc:unm:umaror:2010002
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  1. Jeff Dominitz & Charles F. Manski, 1994. "Eliciting Student Expectations of the Returns to Schooling," NBER Working Papers 4936, National Bureau of Economic Research, Inc.
  2. Dohmen T.J. & Falk A., 2010. "Performance pay and multi-dimensional sorting - Productivity, preferences and gender," Research Memorandum 012, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  3. Borghans Lex & Lee Duckworth Angela & Heckman James J. & Weel Bas ter, 2008. "The Economics and Psychology of Personality Traits," ROA Research Memorandum 001, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  4. Ernst Fehr & Armin Falk, . "Psychological Foundations of Incentives," IEW - Working Papers 095, Institute for Empirical Research in Economics - University of Zurich.
  5. Hartog, Joop & Diaz-Serrano, Luis, 2002. "Earnings Risk and Demand for Higher Education: A Cross-Section Test for Spain," IZA Discussion Papers 641, Institute for the Study of Labor (IZA).
  6. Dohmen, Thomas J. & Falk, Armin & Huffman, David & Sunde, Uwe, 2009. "Homo Reciprocans: Survey Evidence on Behavioural Outcomes," Munich Reprints in Economics 20055, University of Munich, Department of Economics.
  7. Englmaier, Florian & Wambach, Achim, 2005. "Optimal Incentive Contracts under Inequity Aversion," IZA Discussion Papers 1643, Institute for the Study of Labor (IZA).
  8. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2008. "The Intergenerational Transmission of Risk and Trust Attitudes," CESifo Working Paper Series 2307, CESifo Group Munich.
  9. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281.
  10. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
  11. Grund, Christian & Sliwka, Dirk, 2002. "Envy and Compassion in Tournaments," IZA Discussion Papers 647, Institute for the Study of Labor (IZA).
  12. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2008. "Representative Trust And Reciprocity: Prevalence And Determinants," Economic Inquiry, Western Economic Association International, vol. 46(1), pages 84-90, 01.
  13. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
  14. Lalith Munasinghe & Nachum Sicherman, 2006. "Why Do Dancers Smoke? Smoking, Time Preference, and Wage Dynamics," Eastern Economic Journal, Eastern Economic Association, vol. 32(4), pages 595-616, Fall.
  15. Bonin, Holger & Dohmen, Thomas J. & Falk, Armin & Huffman, David & Sunde, Uwe, 2007. "Cross-sectional earnings risk and occupational sorting: The role of risk attitudes," Munich Reprints in Economics 20204, University of Munich, Department of Economics.
  16. 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.
  17. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
  18. Levhari, David & Weiss, Yoram, 1974. "The Effect of Risk on the Investment in Human Capital," American Economic Review, American Economic Association, vol. 64(6), pages 950-63, December.
  19. Hause, John C, 1974. "The Risk Element in Occupational and Educational Choices: Comment," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 803-07, July/Aug..
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