This paper develops and estimates a model of occupational choice and learning that allows for correlated learning across occupation specific abilities. In the labor market, workers learn about their potential outcomes in all occupations, not just their current occupation. Based on what they learn, workers engage in directed search across occupations. The estimates indicate that sorting occurs in multiple dimensions. Workers discovering a low ability in their current occupation are significantly more likely to move to a new occupation. At the same time, workers discovering a high ability in some occupations are more likely to move up the occupational ladder into managerial occupations. By age 28 this sorting process leads to an aggregate increase in wages similar to what would occur if all workers were endowed with an additional year of education.
11.13.2012 ISSN 2573-7953 WP 12-25 DOI 10.26509/frbc-wp-201225Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.
James, Jonathan. 2012. “Learning and Occupational Sorting.” Federal Reserve Bank of Cleveland, Working Paper No. 12-25. https://doi.org/10.26509/frbc-wp-201225
The Cleveland Fed is part of the Federal Reserve, the central bank of the United States. With offices in Cleveland, Cincinnati, and Pittsburgh, we serve an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia. The goal of our work is to strengthen the economic performance of the nation and our region. Learn more about us and what we do.
1455 East 6th Street Cleveland, OH 44114
150 East Fourth Street Cincinnati, OH 45202
One Oxford Centre, Suite 3000 301 Grant Street Pittsburgh, PA 15219
Sign up for our monthly newsletter to get the latest research, expert interviews, and upcoming events from the Cleveland Fed.
View the Infographics on Inflation series from the Center for Inflation Research.
This website uses cookies to ensure the best user experience. By continuing use of our website, you agree to our Privacy Policy
