Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70675
Authors: 
Silos, Pedro
Smith, Eric
Year of Publication: 
2012
Series/Report no.: 
Working Paper, Federal Reserve Bank of Atlanta 2012-3
Abstract: 
This paper assesses the trade-off between acquiring specialized skills targeted for a particular occupation and acquiring a package of skills that diversifies risk across occupations. Individual-level data on college credits across subjects and labor-market dynamics reveal that diversification generates higher income growth for individuals who switch occupations whereas specialization benefits those who stick with one type of job. A human capital portfolio choice problem featuring skills, abilities, and uncertain labor outcomes replicates this general pattern and generate a sizable amount of inequality. Policy experiments illustrate that forced specialization generates lower average income growth and lower turnover, but also lower inequality.
Subjects: 
human capital
occupational choice
income inequality
JEL: 
J24
E24
Document Type: 
Working Paper

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