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Career choice under uncertainty

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  • Konon, Alexander

Abstract

Contemporary theoretical literature on occupational choice consists mostly of models that treat choice outcomes as either deterministic or risky. This paper proposes taking a slightly more realistic perspective by constructing a general occupational choice model on the basis of the assumption that outcomes are partially uncertain such that some reward distributions are unknown. The change in perspective yields some major advantages: Learning and career trajectories, which in general cannot be generated by models with deterministic or risky rewards, become a natural feature of the dynamic solution of sequential occupational choice problems. Furthermore, earnings-puzzle-like observations can be explained by sufficiently high uncertainty aversion, as uncertainty aversion has a significant impact on learning. In addition, central model predictions are consistent with data on relative choice frequencies and enterprise death rates.

Suggested Citation

  • Konon, Alexander, 2016. "Career choice under uncertainty," VfS Annual Conference 2016 (Augsburg): Demographic Change 145583, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc16:145583
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    More about this item

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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