Redistribution, Occupational Choice and Intergenerational Mobility: Does Wage Equality Nail the Cobbler to His Last?

No 538, Working Paper Series from Research Institute of Industrial Economics

Abstract: The classical Roy-model of selection on the labor market is extended in order to analyze intergenerational mobility. This is done by linking ability uncertainty to family background. I derive implications for the allocation of talent and for background dependent earnings patterns within occupations and show that a very compressed wage structure can cause negative sorting of people with family background in the occupation with low returns to ability. I also study the effects of income redistribution on mobility and talent allocation. It is found that a redistributive welfare system either reduces vertical mobility or enhances it at the cost of a shrinking proportion of people choosing the occupation with high returns.

Keywords: Intergenerational mobility; Occupational choice; Allocation of talent; redistribution (search for similar items in EconPapers)
JEL-codes: J62 J68 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2000-06-06
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0538

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