Career choice under uncertainty

Alexander Konon

VfS Annual Conference 2016 (Augsburg): Demographic Change from Verein für Socialpolitik / German Economic Association

Abstract: Contemporary theoretical literature on occupational choice consists mostly of models that treat choice outcomes as either deterministic or risky. This paper proposes taking a slightly more realistic perspective by constructing a general occupational choice model on the basis of the assumption that outcomes are partially uncertain such that some reward distributions are unknown. The change in perspective yields some major advantages: Learning and career trajectories, which in general cannot be generated by models with deterministic or risky rewards, become a natural feature of the dynamic solution of sequential occupational choice problems. Furthermore, earnings-puzzle-like observations can be explained by sufficiently high uncertainty aversion, as uncertainty aversion has a significant impact on learning. In addition, central model predictions are consistent with data on relative choice frequencies and enterprise death rates.

JEL-codes: D81 D83 L26 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-upt
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc16:145583

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