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Occupational Choice and Matching in the Labor Market

Author

Listed:
  • Aloysius Siow

    (University of Toronto)

  • Eric Mak

    (Shanghai University of Finance and Economics)

Abstract

Every labor market have many occupations. Within most occupation, the distribution of earnings is single peaked and right skewed. Firm and establishment effects have large explanatory power in log earnings regressions. Within several countries, most of the recent changes in earnings inequality are due to changes in earnings inequality across firms and not within firms. The paper investigates a model of team production consistent with these findings. Workers differ by cognitive and non-cognitive skills. The labor market sorts workers into different teams and roles within teams. The model integrates the Roy model of occupational choice with Becker’s model of positive assortative matching. We use the model to quantitatively evaluate the role of increased educational attainment in reducing recent earnings inequality in Brazil.

Suggested Citation

  • Aloysius Siow & Eric Mak, 2017. "Occupational Choice and Matching in the Labor Market," 2017 Meeting Papers 30, Society for Economic Dynamics.
    • Handle: RePEc:red:sed017:30
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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