Earnings Risk and Occupational Choice

Download or read book Earnings Risk and Occupational Choice written by Priyanka Singh and published by . This book was released on 2008 with total page 352 pages. Available in PDF, EPUB and Kindle. Book excerpt: The question of how do people choose occupations has puzzled economists. Occupational choice has been analyzed in terms of a variety of factors. However, occupational choices have not been analyzed fully in the context of risk. Individuals differ in their risk preferences and one of the risks associated with an occupation is the earnings risk, which is defined as the variance of wages within an occupation. The literature on earnings risk is relatively new and provides evidence in support of a positive compensating wage differential associated with earnings risk. Yet, none of these studies examine how earnings risk affects occupational choices. In my dissertation I look at how earnings risk affects occupational choice. A model of compensating wage differential and workers occupational choice and sorting in the light of earnings risk is developed.