Occupational Choice and Development

Jan Eeckhout and Boyan Jovanovic ()

No 13686, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The rise in world trade since 1970 has raised international mobility of labor services. We study the effect of such a globalization of the world's labor markets. We find that when people can choose between wage work and managerial work, the output gains are U-shaped: A worldwide labor market raises output by more in the rich and the poor countries, and by less in the middle-income countries. This is because the middle-income countries experience the smallest change in the factor-price ratio, and where the option to choose between wage work and managerial work has the least value in the integrated economy. Our theory also establishes that after economic integration, the high skill countries see a disproportionate increase in managerial occupations. Using aggregate data on GDP, openness and occupations from 115 countries, we find evidence for these patterns of occupational choice.

JEL-codes: L0 O1 (search for similar items in EconPapers)
Date: 2007-12
New Economics Papers: this item is included in nep-dev and nep-lab
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Published as Eeckhout, Jan & Jovanovic, Boyan, 2012. "Occupational choice and development," Journal of Economic Theory, Elsevier, vol. 147(2), pages 657-683.

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Journal Article: Occupational choice and development (2012)
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