Patience Capital, Occupational Choice, and the Spirit of Capitalism

UCLA Department of Economics Working Paper No. 848

48 Pages Posted: 17 Feb 2006

See all articles by Matthias Doepke

Matthias Doepke

Northwestern University - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Fabrizio Zilibotti

University of Zurich; Centre for Economic Policy Research (CEPR)

Date Written: February 2006

Abstract

We model the decision problem of a parent who chooses an occupation and teaches patience to her children. The two choices are linked by a strategic complementarity: patient individuals choose occupations with a steep income profile; a steep income profile, in turn, leads to a strong incentive to invest in patience. In equilibrium, society becomes stratified along occupational lines. The most patient people are those in occupations requiring the most education and experience. The theory can account for the socio-economic transformation that characterized the British Industrial Revolution, when a new class of entrepreneurs rising from the middle classes and imbued with an ethics emphasizing patience and savings proved most capable of profiting from new economic opportunities, and eventually surpassed the pre-industrial elite.

Keywords: Patience, Endogenous Preferences, Stratification, Industrial Revolution

JEL Classification: O40, O10, N10, N30

Suggested Citation

Doepke, Matthias and Zilibotti, Fabrizio, Patience Capital, Occupational Choice, and the Spirit of Capitalism (February 2006). UCLA Department of Economics Working Paper No. 848. Available at SSRN: https://ssrn.com/abstract=883118 or http://dx.doi.org/10.2139/ssrn.883118

Matthias Doepke (Contact Author)

Northwestern University - Department of Economics ( email )

2003 Sheridan Road
Evanston, IL 60208
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

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

Fabrizio Zilibotti

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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