Arbeitspapier
On-the-job search and optimal schooling under uncertainty and irreversibility
This paper develops a labour market model with on-the-job search, match-specific productivity draws and an endogenous irreversible schooling decision. The choice of schoolin is modelled as an optimal stopping problem which gives rise to the equilibrium heterogeneity of workers with respect to the formal education. The optimal schooling decision is characterized by the reservation productivity of students which is a monotonic function of time. Moreover, this reservation productivity is lower in expansions when job-to-job mobility is more intensive. Therefore, the model is compatible with the empirical evidence that expansions have a positive effect on the probability of a school dropout. The schooling density is downward-sloping and the equilibrium wage distribution is right-skewed with a unique interior mode. This means that the majority of workers earn wages in the middle range of the earnings distribution. At the same time there is a small proportion of employees in the beginning of their career with wages in the left tail of the earnings distribution and a small proportion of high-skilled workers earning wages in the right tail of the distribution.
- Language
-
Englisch
- Bibliographic citation
-
Series: Center for Mathematical Economics Working Papers ; No. 492
- Classification
-
Wirtschaft
Analysis of Education
Education and Inequality
Job, Occupational, and Intergenerational Mobility; Promotion
Unemployment: Models, Duration, Incidence, and Job Search
- Subject
-
Optimal schooling
uncertainty
on-the-job search
wage dispersion
- Event
-
Geistige Schöpfung
- (who)
-
Zaharieva, Anna
- Event
-
Veröffentlichung
- (who)
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Bielefeld University, Center for Mathematical Economics (IMW)
- (where)
-
Bielefeld
- (when)
-
2013
- Handle
- URN
-
urn:nbn:de:0070-pub-27007123
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Zaharieva, Anna
- Bielefeld University, Center for Mathematical Economics (IMW)
Time of origin
- 2013
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