Occupational Choice: An Application to the Market for Public School Teachers

Abstract

Most previous work on occupational choice does not satisfactorily treat the potentially important effects of future demand conditions. In contrast, this paper develops and estimates a rational expectations model in which agents look beyond expected starting salaries and take explicit account of future demand conditions. The empirical results demonstrate that future demand conditions are important determinants of the decision to acquire secondary school certification but are not important for the decision to acquire elementary school certification. The paper concludes with a comparison of the dynamic properties of the rational expectations model and a cobweb specification.