Date of Award

Spring 1-1-2025

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

Altonji, Joseph

Abstract

This dissertation studies hows individuals make occupational choices and how that shapes economic success, social mobility, and the labor market. The first chapter uses population-wide administrative data from Finland to examine the underlying drivers and aggregate implications of occupational following—when children enter into their parent’s occupation—for the labor market, social mobility, and total output. I first document that occupational following is a widespread feature of the labor market. Second, I show that pre-labor market multidimensional skills and educational choice statistically explain 19% of following among all 43 two-digit occupations, and 53% among white collar ones. Third, I use an instrumental variables strategy to show that, conditional on pre-labor market skills and education, occupational following leads to income gains of 5.5% and fewer job separations. I then combine these mechanisms into a model of educational and occupational choice. While I find that intergenerational links play a sustained role throughout the pre-labor market and labor market years, the intergenerational transmission of occupation-specific skills is most important in driving occupational following. Lastly, differences in pre-labor market multidimensional skills and educational choice—two potential policy levers—are also a key driver of occupational following and are responsible for 87% and 42% of the class gaps in white collar occupational attainment and elite occupational attainment, respectively. While the first chapter is concerned with the role of parents in impacting occupational choices, the second chapter is concerned with the role of peers and peers’ parents. Children are exposed to very different peers in childhood depending on where they grow up and which schools they attend. In this chapter, along with Jerry Montonen, I study the population-wide, long-term effect of peer composition in childhood on individuals’ future occupational choices. We use within-school, across-cohort variation to identify the effects of peers on occupational choice and other outcomes. Using rich, population-wide administrative data from Finland, we show that a one standard deviation increase in exposure to children from a white collar parental background at age 15 has a significant effect on the likelihood of being in a white collar occupation at age 30. Furthermore, we show that there is a stronger effect at finer occupational levels and that these effects are strongest when one’s own parent is from a different occupation. Finally, we compare the effect of schoolmates to those of other social ties. We find that the causal effects of peers in the neighborhood, while significant, are about half as large as the causal effects of peers in school. My third chapter considers a different context: the global market for white collar jobs. The rise of remote work connects workers and firms across countries. With Jingyi Cui, I study the location preferences, wage patterns, and surplus created by cross-country remote hiring using a novel data set of over 200,000 international, remote, and predominantly white-collar workers from 195 countries working for more than 20,000 firms. We document that richer countries hire and supply more remote workers compared to poorer countries. Moreover, sharing a common language is associated with greater cross-country work contracts. We observe a narrower cross-country wage gap in international remote hiring compared to traditional domestic hiring and attribute around one third of the remaining wage gap between workers from high-income and non-high-income countries to differential sorting into firms. Finally, we quantify the surplus gained from cross-country remote hiring, showing that both the firms and workers involved benefit substantially.

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