Occupational Choice and Development

36 Pages Posted: 21 Dec 2007 Last revised: 26 May 2021

See all articles by Jan Eeckhout

Jan Eeckhout

University College London - Department of Economics

Boyan Jovanovic

New York University - Department of Economics

Date Written: December 2007

Abstract

The rise in world trade since 1970 has raised international mobility of labor services. We study the effect of such a globalization of the world's labor markets. We find that when people can choose between wage work and managerial work, the output gains are U-shaped: A worldwide labor market raises output by more in the rich and the poor countries, and by less in the middle-income countries. This is because the middle-income countries experience the smallest change in the factor-price ratio, and where the option to choose between wage work and managerial work has the least value in the integrated economy. Our theory also establishes that after economic integration, the high skill countries see a disproportionate increase in managerial occupations. Using aggregate data on GDP, openness and occupations from 115 countries, we find evidence for these patterns of occupational choice.

Suggested Citation

Eeckhout, Jan and Jovanovic, Boyan, Occupational Choice and Development (December 2007). NBER Working Paper No. w13686, Available at SSRN: https://ssrn.com/abstract=1077812

Jan Eeckhout

University College London - Department of Economics ( email )

30 Gordon Street
London WC1E 6BT, WC1H 0AX
United Kingdom

Boyan Jovanovic (Contact Author)

New York University - Department of Economics ( email )

19 w 4 st.
New York, NY 10012
United States

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