Career Progression and Comparative Advantage

28 Pages Posted: 6 Feb 2008 Last revised: 29 Jan 2010

See all articles by Shintaro Yamaguchi

Shintaro Yamaguchi

University of Tokyo - Graduate School of Economics

Date Written: January 16, 2010

Abstract

This paper constructs and estimates a structural dynamic model of occupational choice in which all occupations are characterized in a skill requirement space using data from the Dictionary of Occupational Titles and the NLSY79. This skill requirement space approach has its merit in computational simplicity as well as ease of interpretation: it allows the model to include hundreds of occupations at the three-digit census classification level without a large number of parameters. Parameter estimates indicate that wages grow with the skill requirements of an occupation and that educated and experienced individuals are better rewarded in a cognitive and interpersonal skill demanding occupation. They also suggest that ignoring self-selection into occupations and individual heterogeneity may result in counter-intuitive and biased estimates of the returns to skill requirements.

Keywords: Occupational choice, occupational sorting, human capital, skills, structural estimation

JEL Classification: J24

Suggested Citation

Yamaguchi, Shintaro, Career Progression and Comparative Advantage (January 16, 2010). Available at SSRN: https://ssrn.com/abstract=1090942 or http://dx.doi.org/10.2139/ssrn.1090942

Shintaro Yamaguchi (Contact Author)

University of Tokyo - Graduate School of Economics ( email )

Tokyo
Japan

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