Cyclical Occupational Choice in a Model with Rational Wage Expectations and Perfect Occupational Mobility

Bernhard Felderer and André Drost
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Bernhard Felderer: Institute for Advanced Studies, Vienna
André Drost: Department of Economics, University of Cologne

No 81, Economics Series from Institute for Advanced Studies

Abstract: In many professional labor markets the number of new workers follows a cyclical time path. This phenomenon is usually explained by means of a cobweb model that is based on the assumptions of myopic wage expectations and occupational immobility. Since both assumptions are questioned by the empirical literature, we develop an alternative model that is based on the assumptions of rational wage expectations and perfect occupational mobility. Depending on the production function, the model can generate cycles in the number of workers who enter a professional labor market.

Keywords: Occupational choice; Rational expectations; Occupational mobility; Linear dynamics (search for similar items in EconPapers)
JEL-codes: I21 J44 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2000-03
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Citations: View citations in EconPapers (2)

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https://irihs.ihs.ac.at/id/eprint/1256 First version, 2000 (application/pdf)

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