Human Capital, Uncertain Wage Distributions, and Educational and Occupational Choices

J. Peter Mattila and Peter Orazem

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: This study develops a model of occupational and educational choices. Individuals are assumed to choose careers based on expected utility maximization, given uncertainty concerning future earnings. The model directly leads to estimable equations relating career choices to the moments of occupational earnings distributions. The authors report maximum likelihood estimates using a sample of high school graduates from Maryland school districts, 1951-69. The eight observed career choices respond as expected to the first and second moments of the earnings distribution and to a measure of school quality. Reasonable estimates of human capital production and supply elasticities are obtained for the career choices.

Date: 1991-02-01
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Published in International Economic Review, February 1991,, pp. 103-122

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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:10841

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