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Occupational Choice with Endogenous Spillovers

Albornoz, F; Cabrales, A; Hauk, E; (2019) Occupational Choice with Endogenous Spillovers. The Economic Journal , 129 (621) pp. 1953-1970. 10.1111/ecoj.12634. Green open access

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Abstract

We study a model that integrates productive and socializing efforts with occupational choice, and endogenous spillovers. We show that more talented individuals work harder and contribute more to externalities, but also have incentives to segregate. Average socializing increases in the productivity of the occupation. The size of an occupation grows with its synergies. Individuals under‐invest in productive and socializing effort, and sort themselves inefficiently into occupations. We derive the optimal subsidy for sorting into different occupations. Finally, we derive a rule to identify overpopulated sectors and establish the connection between inequality of talents, socializing, productive efforts and occupation size.

Type: Article
Title: Occupational Choice with Endogenous Spillovers
Open access status: An open access version is available from UCL Discovery
DOI: 10.1111/ecoj.12634
Publisher version: https://doi.org/10.1111/ecoj.12634
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: occupational choice, socialization ,social interactions, endogenous spillovers
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10051990
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