| Tekijä: | Alexeev, M. Kaganovich, M. |
| Otsikko: | Returns to human capital under uncertain reform: Good guys finish last |
| Lehti: | Journal of Economic Behavior and Organization
1998 : SEP, VOL. 37:1, p. 53-70 |
| Asiasana: | HUMAN CAPITAL OCCUPATIONAL CHOICE MARKETS MODELS |
| Kieli: | eng |
| Tiivistelmä: | The paper models the career decisions of agents, heterogeneous in their ability, facing the possibility of future drastic changes, e.g. reforms, affecting the demand for different professions. Supposing that the uncertainty arises after educational choices have been made by the cohort of agents, their response to it is analyzed depending on ability and educational attainment. It is shown that the more able individuals tend to stay in their original profession, while their less able counterparts are more likely to switch to an alternative occupation. If reform does take place, the more able agents will be forced to change careers. Since they switch late, they miss the benefits of learning-by-doing. This adverse selection has important implications for the analysis of labor allocation during transition from central planning to markets. In particular, it lowers productivity in the emerging `market' occupations, reducing the benefits of reforms. |
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