The Effect of Transferability of Skills and Regret on Sectoral Mobility after Graduation∗

After graduation many students start working in sectors not related to their field of study and participate in training targeted at work in other sectors. In this paper we analyze this sectoral mobility after graduation. We develop a model in which students accumulate partially transferable human capital but also learn about their vocational preferences at university and during the first years in the labor market. As a consequence, after graduation, these young workers might know that work in another sector would better fit their preferences although they are better equipped for work in their own sector. The empirical analysis reveals that, consistent with the predictions of this model, the probability of sectoral mobility increases the more graduates regret their educational choice and the higher the transferability of skills. When graduates leave, they take more training and face larger wage losses when the transferability is lower. Finally, we find evidence that pupils who face more uncertainty about their educational choice tend to choose fields of study with a high transferability of skills. Theme: Occupational Choice and Mobility