Model Of Occupational Choice Research Articles

A Delphi method investigation to prioritize activity-related determinants thought to affect mental health in adolescent populations.

Emergent mental illness during adolescence affects daily functioning, causing disruption to daily activities, routines, and patterns. Multiple inter-related personal, social and environmental determinants influence the onset, nature and subsequent course of those difficulties. Research suggests a bi-directional relationship exists between mental health and activity choices. Activity-focused interventions such as occupational therapy may improve adolescent mental health related outcomes. In this study, we identify and select which activity-related determinants should be prioritized in the development of an occupation therapy-based intervention for adolescents with emerging mental health difficulties using expert consensus. A modified two-round Delphi survey method was conducted with occupational therapists and researchers to ascertain a consensus opinion on the prioritization of specific activity-related determinants that influence 16- to 17-year-olds'. Eighty-nine determinants were identified and prioritized. Fourteen of these were personal activity-related determinants including 'types of activity' in which young people engage, the 'balance of activities' in which they engage, their 'over and under consumptions of activities', and their 'underdeveloped occupation-based coping skills'. The expert panel prioritized 'personal self-confidence', 'values', and 'perception of confidence' in relation to the activities adolescents do. This study generated a detailed picture of the activity-related determinants that are important in adolescence, and aligns with the adolescent model of occupational choice. Our findings have potential to inform activity-related intervention development and policy. Further research is needed, particularly to understand young people's perspectives on these determinants and to investigate the determinants that would benefit from further empirical research.

Risk-sharing and entrepreneurship

This study examines the impact of risk-sharing on entrepreneurship-driven innovation in an occupational choice model, where entrepreneurs exert effort to innovate. Risk-sharing may increase the number of individuals who become entrepreneurs by limiting the downside risk. The effort of entrepreneurs may, however, be hampered by high risk-sharing if this limits the returns faced by successful entrepreneurs relative to unsuccessful entrepreneurs. We construct a simple theoretical model where risk-sharing may be either private or provided through the welfare state by means of taxation. We show that, in addition to the occupational and effort choice dimensions, the level of public risk-sharing also matters for the characteristics of entrepreneurs.

Occupations, retirement, and the value of disability insurance

Occupations vary greatly in physical intensity, and there are, correspondingly, many differences in later-life work disability risk, retirement patterns, and applications for Social Security Disability Insurance (SSDI)—a national program that insures shocks to work productivity due to disability, with about nine million current beneficiaries in the U.S. In light of its widespread coverage and large differences in utilization across occupations, this paper aims to measure the value of the SSDI program across a broad population and the extent to which it influences the major choice of occupation. Using data from the Health and Retirement Study and O*NET, I estimate a life-cycle equilibrium model of occupational choice, work, savings, and disability at older ages, and find that incorporating occupations and preference heterogeneity is an integral part of understanding work and SSDI application behavior. While SSDI coverage is nearly universal and the premiums from workers are uniform, estimates suggest that the value of the program varies greatly, from being worth 2.1 to 14.5 percent of earned income—depending on preferences and choice of occupation—though for all groups it is welfare improving. I also find that SSDI plays an important role in the choice of occupation for older workers, providing an insurance value that results in over ten percent more people choosing physically intense, blue-collar occupations at older ages. This overall effect, however, masks the underlying selection of less risk-averse individuals into blue-collar jobs, which, if not accounted for, would lead to overstating the effects of the SSDI program on behavior. A counterfactual experiment aimed at eliminating the distortion created by uniform SSDI tax rates shows that—even without any additional employer accommodation of disabled workers—occupation-specific tax rates lead to fewer aggregate work-disabled years.

Immigration and occupational comparative advantage

Job selection by high-skilled foreign-born workers in the US correlates strongly with country of origin. We use a Fréchet-Roy model of occupational choice to evaluate the causes of immigrant sorting. We find that revealed comparative advantage in the US is stronger for workers from countries with higher education quality in occupations that are more intensive in cognitive reasoning, and for workers from countries that are more linguistically similar to the US in occupations that are more intensive in communication. Our findings hold for immigrants who arrived in the US at age 18 or older (who received their K-12 education abroad) but not for immigrants who arrived in the US as children (who received their K-12 education domestically). We obtain similar results for immigrant sorting in Canada, consistent with origin-country education quality, rather than US immigration policy, being what drives sorting patterns.

Skill heterogeneity and market labour income inequality

Occupational choice models predict that, ceteris paribus, countries with higher dispersion of skill will have higher market labour income inequality. However, an extended conclusion from empirical research is that cross-country variations in dispersion of skill explain little of the variation in income inequality. This paper identifies factors related to production and organization technologies that moderate the relationship between dispersion of skill and dispersion of income in occupational choice equilibrium outcomes and that, if not properly accounted for, can bias the results of the empirical studies that explain dispersion of income as a function of dispersion of skill. In particular, comparing equilibrium outcomes from occupational choices in economies that differ in the distribution of skill and in the efficiency of supervision hierarchies, the paper can explain why the US and Sweden have similar labour productivity, but income inequality is higher in the US than in Sweden, and why productivity is lower and income inequality is higher in Spain than in Sweden.

Misallocation of the immigrant workforce: Aggregate productivity effects for the host country

Immigrants often face more obstacles in finding employment in their desired occupations than native workers, resulting in a larger misallocation of their workforce. This issue can decrease the host country’s aggregate labor productivity during large-scale migrations. Using a model of occupational choice that considers discrimination and other barriers for immigrants to find their desired occupations, we investigate the prevalence of these frictions and quantify the implied productivity losses for Colombia between 2015 and 2019, when the country received a mass migration from Venezuela. Our findings indicate that both frictions significantly misallocate Venezuelan immigrants. Removing them increase Colombian productivity by 0.9%, making the contribution of immigration to economic growth up to 29% larger. Our study thus highlights the importance of reducing barriers for immigrants in the labor market to enhance productivity and foster growth in the host country.

Did the unemployment benefits extension between 2009–2013 deter entrepreneurship in the US? Some evidence and a model of unemployment benefits and entrepreneurship

The 2007–2008 financial crisis severely dampened the American entrepreneurial sector, and the rate of business formation remained low until 2014. This study empirically assesses whether the extensions of unemployment benefits (EUB) contributed to the delay in recovery in entrepreneurship. We then introduce a general equilibrium occupational choice model of unemployment benefits and entrepreneurship and use sharp discontinuity and variations across states in the maximum duration of benefits at the end of 2013 to identify the negative impact of EUB on startups. Eliminating the EUB increased entrepreneurship by 1.4–1.78 percentage points in 2014. Regarding the model, moderate increases in unemployment benefits primarily affect entrepreneurship through the extensive margin by deterring low-ability and necessity entrepreneurs while having little impact on decisions for high-ability agents; however, overly generous unemployment benefits can negatively impact entrepreneurship, the labor market and the overall economy.

Propensity for Self-Employment in a Model of Occupational Choice: Evidence from a Cohort of Recent University Graduates in Spain

This paper presents a microeconomic analysis of the occupational choices that individuals make after graduating from higher education. Specifically, a binomial logit model of the self-employment decision, which can be seen as a special case of a model of utility maximization, is estimated for a large, nationally representative sample of Spanish bachelor’s degree holders. The estimation of the logit model allows one to analyze the influence of the university degree and individual sociodemographic characteristics on the probability of becoming self-employed five years after graduation. Results show that graduates in Odontology, Physiotherapy, Architecture, Law, Fine Arts, Pharmacy, and Psychology are the most likely to become self-employed. Surprisingly, financially literate individuals (economics and finance-related undergraduate degree holders) are less likely to start their own businesses. The paper also shows that women are less likely to be self-employed than men, but those graduates whose mothers obtained a university degree have an increased likelihood of being self-employed. The paper highlights the need for career guidance for undergraduates contemplating a career in self-employment.

Skill bias, financial frictions, and selection into entrepreneurship

Financial frictions adversely affect productivity by discouraging entrepreneurship, which is often measured by the self-employed. This paper distinguishes different types of self-employment when studying this question. Using micro data for 77 countries from all income levels, we show that employers’ labor shares are increasing with GDP per capita, whereas own-account employment (self-employed without employees) is decreasing. We also find almost universally negative selection on education into own-account status relative to wage workers and positive selection into employers. To quantitatively match these facts, we introduce skill-biased technological change across countries in an occupational choice model with financial frictions. Our model predicts an average of 19% output gains in low-income countries from removing financial frictions. In contrast, an alternative model with skill-neutral technological change cannot match the high own-account employment share in low-income countries, thus overestimating the output gains by 13 percentage points.

Can optimism solve the entrepreneurial earnings puzzle?*

AbstractIn this paper, we apply a general equilibrium occupational choice model to the study of the impact of optimism on the earnings of entrepreneurs and workers. We extend the work of Lucas (1978 Bell Journal of Economics 9, 508–523) by assuming a fraction of individuals are optimistic about their ability as entrepreneurs. The model shows that optimism leads to a misallocation of talent and inputs, which raises input prices and lowers output. The model is calibrated to match salient features of the UK economy and the British Household Panel Survey. The calibration shows that optimism can account for more than half of the size of the entrepreneurial earnings puzzle in the UK.

Coordinated Work Schedules and the Gender Wage Gap

Abstract This paper studies how coordinated work schedules across jobs contribute to the gender wage gap. Using US time diary data, we construct occupation-level measures of coordinated schedules. Higher coordination is associated with higher wages and a larger gender wage gap. Empirically, women with children allocate more time to household care and are penalised for missing work during peak hours. An equilibrium occupational choice model generates a gender wage gap of 8.9%; most of the gender wage gap is within occupations. If coordination is set to the value of healthcare support across all occupations, the within-occupation gender gap halves.

Sex differences and occupational choice Theorizing for policy informed by behavioral science✰

Occupations are segregated with respect to sex, even in modern, egalitarian societies. There are strong pressures to eliminate segregation and therefore strong reasons to correctly theorize why segregation persists. The dominant view underpinning most public policies is essentially that environmental factors nudge women and men into different occupational paths. Nudging, however, ignores research suggesting that psychological traits that influence occupational choice differs between women and men, on average.Some of the most well-documented and persistent average sex differences between men and women suggest that the taken-for-granted assumption that an egalitarian society would exhibit a more or less equal distribution of men and women across the occupational landscape may be mistaken. Rather, models of occupational choice informed by individual differences in preferences, broadly understood, would help us better explain how men and women behave in the labor market. Differences in occupational preferences will affect choices. Therefore, differences in proportions of women and men across professions may be in line with an egalitarian society and the well-being and best interest of both men and women in society.

Cross‐country disparities in skill premium and skill acquisition

AbstractSkilled individuals are rewarded more in poor than in rich countries. Why aren't more individuals acquiring skills in poor countries? We document that the unemployment rate of the skilled net of that of the unskilled decreases with a country's level of development. Using a matching model of occupational choice and skill acquisition, we quantify the role of barriers to enter entrepreneurship for these unemployment rates, skill premium and acquisition. The cross‐country correlation between skill premium and acquisition decreases by 45% when each country's gap to the US in the entrepreneurship barrier is decreased enough to even the unemployment differential.

Digital exposure, age, and entrepreneurship

This study focuses on age and digital exposure as factors driving individuals to be (1) employees or entrepreneurs, (2) full-time or part-time, or (3) opportunity or necessity entrepreneurs. It extends occupational choice models, relying on a utility maximization framework, to entrepreneur types incorporating age and digital exposure effects. Using 132 months of Current Population Survey data and multilevel modelling with individuals’ fixed effects and metropolitan area random effects, the study finds that (1) workers with low- and high- digital exposure are more likely to become entrepreneurs than peers with medium digital exposure, mirroring digitization’s “push” and “pull” mechanisms on entrepreneurship; (2) age strengthens digitization’s “pull” mechanism to be entrepreneurs (versus employees) and opportunity (versus necessity) entrepreneurs; (3) digital exposure has a weak marginal potential to increase workers’ odds to be part-time (versus full-time) entrepreneurs. The study also notes the importance of location and concludes with discussion and implications.

Skill-biased entrepreneurial decline

The U.S. is undergoing a long-term decline in entrepreneurship. We show that this slow-down in entrepreneurship has been more pronounced for skilled individuals – those with a college degree. We document new facts on the skill-biased nature of declining entrepreneurship and propose that it is a response to the rising worker skill premium observed over the same period. In support of this, we find that workers' earnings grew faster than entrepreneurs', particularly for skilled individuals, discouraging the pursuit of entrepreneurship. To quantify the impact of the skill premium on entrepreneurship, we develop a model of occupational choice with worker heterogeneity. In the model, a rising skill premium – driven by skill-biased technological change – contributes little in lowering entrepreneurship. Instead, around 70% of the observed decline in entrepreneurship is driven by skill-neutral technological change and a rising share of college graduates. A rise in the skill premium interacts with these forces to generate the skill-biased decline, and in doing so, shifts the composition of entrepreneurs towards the unskilled, lowering average entrepreneurial productivity. Our findings suggest an integral role for the changing income structure of workers in driving the broader decline in business dynamism in the U.S.

Tolerance of Informality and Occupational Choices in a Large Informal Sector Economy

Abstract We study an equilibrium two-sector occupational choice model – agents can be (formal or informal) entrepreneurs or workers. An informal entrepreneur faces taxation determined by the combination of her capital choice and society’s tolerance of informality. Our model is consistent with many empirical findings regarding the informal sector in Brazil, a developing economy with a large informal sector. With a calibrated version of our model, we show that as society’s tolerance of informality decreases, the informal sector employs less capital and labor, and informality decreases. We conduct several counterfactual exercises. Informality is substantially lower in economies that are less tolerant of informal activities, formal entrepreneurs have more access to financial markets, and taxation of output and labor is lower. We extend the model to consider stochastic taxation of informal activities – a higher (average) informal output taxation and its variability reduce informality.

A health economic theory of occupational choice, aging, and longevity

In this paper, I propose a life cycle model of occupational choice with endogenous health behavior, aging, and longevity. Health-demanding work leads to a faster accumulation of health deficits and is remunerated with a hazard markup on wages. Health deficit accumulation is also influenced by unhealthy consumption and health care expenditure. I calibrate the model for a 20 year old average American in 2010 and show the following results, among others. Health-demanding work is ceteris paribus preferred by male, young, and healthy individuals with a relatively low level of education. Health demanding work has a negligible effect on health behavior because income and health investment effects largely offset each other, implying that health effects can be attributed almost fully to the direct health burden of work. Better medical technology induces low-skilled individuals to spend a greater part of their life in health-demanding work and thus increases the health gradient of education. High wealth endowments protect against unhealthy occupational choices. I show robustness of the results in an extension of the model with regard to endogenous retirement.

Financial Frictions and Firm Informality: A General Equilibrium Perspective

Abstract This paper assesses the extent to which financial development and informality are related, and how this relation translates into differences in GDP and TFP across countries. To this end, we develop a quantitative life-cycle general equilibrium model of occupational choice with imperfect tax enforcement, in which informal entrepreneurs have no access to credit and face an endogenous probability of being caught for tax evasion. Our quantitative analysis shows that the degree of financial frictions of a country is crucial in shaping the firm’s incentives to evade taxation, a feature that, in the aggregate, results into a non-linear relationship between financial development and both the size of informality and GDP per capita. We test these model’s predictions with cross-country data and find supporting evidence in favour of both non-linearities.

Like father, like son: Occupational choice, intergenerational persistence and misallocation

We develop a dynamic quantitative model of occupational choice and search frictions with multiple channels of intergenerational transmission (comparative advantage, social contacts, and preferences), and use it to decompose the occupational persistence observed in the UK. In the model, workers who choose their father's occupation find jobs faster and earn lower wages, which is consistent with patterns found in UK data. Quantitatively, parental networks account for 79% of total persistence. Shutting down parental networks or the transmission of preferences improves the allocation of workers, and thus yields welfare gains, while removing the transmission of comparative advantage generates welfare losses.

Involuntary entrepreneurship – Evidence from Thai urban data

We structurally estimate a model of occupational choice between wage work and entrepreneurship which allows for ‘involuntary entrepreneurship’ (running a business out of necessity). Involuntary entrepreneurs would earn higher income as workers but cannot access a wage job because of labor market frictions. Using Thai urban household data, we estimate the share of involuntary entrepreneurs as 19% of all businesses in our sample, with robustness runs yielding a range from as low as 7% to as high as 25%, depending on the data stratification and empirical specification. Involuntary entrepreneurs earn significantly lower income (85% less on average) than the rest of the entrepreneurs and are more likely among low-wealth and low-schooling households. Decomposing the estimated effects of the labor and credit market frictions, our results imply 18.7% excess (involuntary) entrepreneurs because of labor market frictions and 0.6% fewer entrepreneurs because of credit frictions, both relative to the unconstrained optimum. Counterfactual policy evaluations show that involuntary entrepreneurship can only be reduced by directly targeting labor market frictions, with attention paid to the equilibrium effect on the market wage.