Occupational Choice and Returns to Skills: evidence from the NLSY79 and O*Net (Job Market Paper) PDF
Occupational choices carry substantial information about a worker’s human capital. They are informative about a worker’s education, experience and skills. Workers, however, self-select into their occupations. For this reason, occupational indicators are endogenous variables in any wage equation. This paper defines an occupation as a vector in a space of skill requirements, and proposes an instrumental variables approach to deal with endogeneity. I combine data from the National Longitudinal Survey of Youth, 1979 Cohort (NLSY79), with data from the Occupational Information Network (O*Net). By doing so, I instrument the math requirements of a worker’s occupation in the 2000s with the math requirements of the worker’s preferred occupation back in 1979. A similar instrument is used for language requirements. Such procedure allows me to measure the wage return to math and language skills for individuals represented by the NLSY79 sample.
The Economic Payoff of Creating Good Job Conditions: Theory and Evidence from Latin America, with Eduardo Lora
Based on Akerlof and Kranton (2005), who argue that group identity and social norms influence individual preferences towards work effort, a model is developed to understand why firms create good job conditions, taking into account the cost of implementing them and their impact on wages and productivity. Then, using individual-level data from the Gallup World Poll for 18 Latin American countries, the main predictions of the model are tested using propensity score matching. We find a positive link between good job conditions, workers’ labor income and productivity when there are several simultaneous signals of a good work environment. We conclude that there is a positive payoff of investing in good job conditions for both workers and firms.