Literature Review:

(Gibbons, Katz, Lemieux 2005)

We design a model in which a worker’s current wage and sector are determined by his or her talents.
Some of the worker’s skills are originally unknown to both the market and the worker. Wage changes
caused by endogenous factorsAs labour market participants become more aware of these issues, they
become more mobile.Skills that go unnoticed We demonstrate how to estimate the model using
Methods for nonlinear instrumental variables We put our method to investigate salaries and worker
allocation across occupations.Individual-level panel data from the National Longitudinal Survey of Youth
Longitudinal Survey We discovered that high-wage industries employ Workers with a high level of skill
and a high rate of return on their skill.