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The Wealth Effect in Occupational Choice

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  • Weiss, Yoram
Abstract
The purpose of this paper is to indicate regularities in the area of occupational choice using income-leisure analysis. A simple one-period model is used to examine the effect of changes in nonhuman and human wealth on the choice of an occupation. It is argued that under certainty: An increase in nonwage income will increase the propensity to choose pleasant low-paying work activities. An increase in human capital will also induce a choice of pleasant work activities if the income effect is dominant. Under conditions of uncertainty an increase in nonwage income will tend to encourage the choice of risky high-paying work activities if their monetary returns are uncertain. If the nonmonetary returns of an occupation are uncertain the propensity to choose it will tend to decrease with wealth. Finally, an increase in human capital is likely to discourage the choice of occupations with risky monetary returns.
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Suggested Citation

  • Weiss, Yoram, 1976. "The Wealth Effect in Occupational Choice," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(2), pages 292-307, June.
    • Handle: RePEc:ier:iecrev:v:17:y:1976:i:2:p:292-307
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    References listed on IDEAS

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    1. Diamond, Peter A. & Stiglitz, Joseph E., 1974. "Increases in risk and in risk aversion," Journal of Economic Theory, Elsevier, vol. 8(3), pages 337-360, July.
    2. Melvin W. Reder, 1962. "Wage Differentials: Theory and Measurement," NBER Chapters, in: Aspects of Labor Economics, pages 257-317, National Bureau of Economic Research, Inc.
    3. Keeney, Ralph L, 1973. "Risk Independence and Multiattributed Utility Functions," Econometrica, Econometric Society, vol. 41(1), pages 27-34, January.
    4. Weiss, Yoram, 1971. "Learning by doing and occupational specialization," Journal of Economic Theory, Elsevier, vol. 3(2), pages 189-198, June.
    5. Weiss, Yoram, 1972. "The Risk Element in Occupational and Educational Choices," Journal of Political Economy, University of Chicago Press, vol. 80(6), pages 1203-1213, Nov.-Dec..
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    Cited by:

    1. Tyler Cowen & Alexander Tabarrok, 2000. "An Economic Theory of Avant‐Garde and Popular Art, or High and Low Culture," Southern Economic Journal, John Wiley & Sons, vol. 67(2), pages 232-253, October.
    2. Fershtman, Chaim & Weiss, Yoram, 1993. "Social Status, Culture and Economic Performance," Economic Journal, Royal Economic Society, vol. 103(419), pages 946-959, July.
    3. Daniel, Christophe & Sofer, Catherine, 1998. "Bargaining, Compensating Wage Differentials, and Dualism of the Labor Market: Theory and Evidence for France," Journal of Labor Economics, University of Chicago Press, vol. 16(3), pages 546-575, July.
    4. Danielle Lamb & Rafael Gomez & Milad Moghaddas, 2022. "Unions and hazard pay for COVID‐19: Evidence from the Canadian Labour Force Survey," British Journal of Industrial Relations, London School of Economics, vol. 60(3), pages 606-634, September.
    5. Costa, Dora L. & Yetter, Noelle & DeSomer, Heather, 2020. "Wartime health shocks and the postwar socioeconomic status and mortality of union army veterans and their children," Journal of Health Economics, Elsevier, vol. 70(C).
    6. Scott Stern, 2004. "Do Scientists Pay to Be Scientists?," Management Science, INFORMS, vol. 50(6), pages 835-853, June.
    7. Fabio Maccheroni & Massimo Marinacci & Aldo Rustichini, 2012. "Social Decision Theory: Choosing within and between Groups," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(4), pages 1591-1636.
    8. repec:eee:labchp:v:1:y:1986:i:c:p:641-692 is not listed on IDEAS
    9. Yoram Weiss & Chaim Fershtman, 1992. "On the Stability of Occupational Rankings," Rationality and Society, , vol. 4(2), pages 221-233, April.
    10. Rafael Lopes de Melo, 2012. "Firm Heterogeneity, Sorting and the Minimum Wage," 2012 Meeting Papers 611, Society for Economic Dynamics.
    11. Scott Stern, 1999. "Do Scientists Pay to Be Scientists?," NBER Working Papers 7410, National Bureau of Economic Research, Inc.
    12. Ernesto Villanueva, 2004. "Compensating wage differentials and voluntary job changes: Evidence from West Germany," Economics Working Papers 738, Department of Economics and Business, Universitat Pompeu Fabra.
    13. Yoram Weiss, 1975. "The Earnings of Scientists, 1960-1970: Experience, Age and Vintage Effects," NBER Working Papers 0099, National Bureau of Economic Research, Inc.
    14. Dora Costa & Noelle Yetter & Heather DeSomer, 2019. "Wartime Health Shocks and the Postwar Socioeconomic Status and Mortality of Union Army Veterans and their Children," NBER Working Papers 25480, National Bureau of Economic Research, Inc.
    15. Chaim Fershtman, 1993. "Social Status," Discussion Papers 1054, Northwestern University, Center for Mathematical Studies in Economics and Management Science.

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    JEL classification:

    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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