Occupational Sorting of School Graduates: The Role of Economic Preferences

38 Pages Posted: 2 Aug 2014

See all articles by Didier Fouarge

Didier Fouarge

Maastricht University

Ben Kriechel

Maastricht University - Research Centre for Education and the Labour Market (ROA); IZA Institute of Labor Economics

Thomas J. Dohmen

Institute for the Study of Labor (IZA); Maastricht University - Business Investment Research Center (BIRC)

Abstract

We relate risk attitudes and patience of young graduates from high-school, college and university, measured around the time that they start their labor market career in a large representative survey, to the riskiness and timing of earnings in the occupations they choose to work in. We find a systematic positive and significant relation between willingness to take risks and measures of occupational earnings risks and employment risk that we derive from a large administrative data set. Patient individuals are significantly more likely to choose for occupations with a steep earnings profile. Individuals whose economic preferences are not well aligned with the riskiness and timing of earnings in their initial occupation are more likely to change to an occupation that better matches their economic preferences.

Keywords: risk preferences, earnings risk, sorting, occupational choice

JEL Classification: J24, J31, D01

Suggested Citation

Fouarge, Didier and Kriechel, Ben and Dohmen, Thomas, Occupational Sorting of School Graduates: The Role of Economic Preferences. IZA Discussion Paper No. 8355, Available at SSRN: https://ssrn.com/abstract=2475323

Didier Fouarge (Contact Author)

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

Ben Kriechel

Maastricht University - Research Centre for Education and the Labour Market (ROA) ( email )

P.O. Box 616
Maastricht, MD6200
Netherlands

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Thomas Dohmen

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Maastricht University - Business Investment Research Center (BIRC) ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands
+31-43-388 3832 (Phone)
+31-43-388 4856 (Fax)

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