Occupational Choice with Endogenous Spillovers

Albornoz, Facundo; Cabrales, Antonio; Hauk, Esther

Abstract

© 2019 Royal Economic Society. Published by Oxford University Press. We study a model that integrates productive and socialising 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 socialising increases the productivity of the occupation. The size of an occupation grows with its synergies. Individuals underinvest in productive and socialising 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, socialising, productive efforts and occupation size.

Citation

Albornoz, F., Cabrales, A., & Hauk, E. (2019). Occupational Choice with Endogenous Spillovers. Economic Journal, 129(621), 1953-1970. https://doi.org/10.1111/ecoj.12634

• Journal Article Type: Article
• Acceptance Date: Jul 5, 2018
• Online Publication Date: Aug 3, 2018
• Publication Date: Jul 1, 2019
• Deposit Date: Sep 13, 2018
• Publicly Available Date: Aug 4, 2020
• Journal: Economic Journal
• Print ISSN: 0013-0133
• Electronic ISSN: 1468-0297
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 129
• Issue: 621
• Article Number: ecoj12634
• Pages: 1953-1970
• DOI: https://doi.org/10.1111/ecoj.12634
• Keywords: occupational choice, socialization, social interactions, endogenous spillovers
• Public URL: https://nottingham-repository.worktribe.com/output/1074422
• Publisher URL: https://onlinelibrary.wiley.com/doi/abs/10.1111/ecoj.12634
• Additional Information: This is the peer reviewed version of the article, which has been published in final form at https://onlinelibrary.wiley.com/doi/abs/10.1111/ecoj.12634. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.
• Contract Date: Sep 13, 2018