Educational Streaming, Occupational Choice, and the Distribution of Wages

Kelly Bedard

Abstract

This paper studies how the structure and quality of education influence occupational choices and the distribution of wages. The Roy (1951) model of occupational choice is extended to incorporate the streaming of students into different programs based on academic ability prior to the point at which they self-select into an occupation. Streaming dates and the relative size of each stream have important implications for sectoral selection and the distribution of wages. Using German wage data and simulation techniques I show that educational policy changes may have a profound impact on certain groups of students. For example, admitting more students into the academic stream will increase the wages of `movers' who subsequently work in the white collar sector while lowering the wages of `movers' who continue to work in blue collar jobs.

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