Working Paper Series
Redistribution, Occupational Choice and Intergenerational Mobility: Does Wage Equality Nail the Cobbler to His Last?
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
Keywords: Intergenerational mobility; Occupational choice; Allocation of talent; redistribution; (follow links to similar papers)
JEL-Codes: J62; J68; (follow links to similar papers)
33 pages, June 6, 2000
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