An Economic Analysis of Identity and Career Choice

Standard economic models tend to be more speci…c about pecuniary payo¤s than non-pecuniary payo¤s to education. Based on Akerlof and Kranton (2000), we consider a model of career choice and identity where individuals derive nonpecuniary identity payo¤s. Using factor analysis on a range of attitude questions, we …nd two factors related to identity (career orientation and social orientation), which are important for planned educational choices and for observed gender differences. The implication is that policymakers and institutions of higher education need to focus on identity related issues rather than just improved …nancial incentives if they aim at attracting the high ability youth to certain careers. JEL codes: I21 J24 We thank the Danish Strategic Research Council, project: ‘Intergenerational Transmission of Human Capital’ for …nancial support. We appreciate comments from the editor, Peter Arcidiacono, two anonymous referees, Allan Wurtz as well as comments from seminar participants at Aarhus University, AKF, ASB, DGPE and EALE. The usual disclaimer applies.