Examining occupational choices in the framework of Cobweb and rational expectations models: An analysis on the teacher labor market

In the Turkish labor market, the unemployment rate among higher education graduates has been increasing in recent years. Teaching, which was seen as an attractive profession, especially in the early 2000s, has been faced with a chronic unemployment problem in recent years. In line with these problems, the aim of the study is to examine the explainability of teacher candidates' career choice behavior in Turkey with Cobweb and Rational Expectations Theories. In the career choice model based on the Cobweb Theory, the hypothesis is that students only consider conditions of the previous period of the labor market when choosing a career. In the career choice model based on the Rational Expectation Theory, it is examined to what extent the labor market dynamics are consistent with the predictions of the teacher candidates who have already chosen a teaching program and graduated. In this study, we used panel data which cross-sectional units consist of 23 teaching branches, and the time dimension consists of 1998-2020 annual data. Occupational choice model based on the Cobweb Theory was estimated by PMG and quantile regression methods. Due to the non-normal distribution of the data set and the presence of outlier values, the results obtained from quantile regression estimator were taken as reference. Occupational choice model based on the Rational Expectation Theory was estimated by the quantile regression method. According to the findings, it was observed that the students exhibited partially rational behavior, but the predictions of the students and the actual labor market conditions were not completely consistent. On the other hand, it has been determined that the myopic (previous period observation) expectations are stronger. As a result, students choosing a teaching program (in t period), they expect that the labor market conditions in the period they will graduate (t+4) will be same as the conditions of the previous period (t-1) from the year they entered the university.