The Engineering Labor Market

This paper develops a dynamic supply and demand model of occupational choice and applies it to the engineering profession. The model is largely successful in understanding data in the U.S. engineering labor market. The engineering market responds strongly to economic forces. The demand for engineers responds to the price of engineering services and demand shifters. More important, supply and enrollment decisions are remarkably sensitive to career prospects in engineering. Also a rational model, in which students use some forward-looking elements to forecast future demand for engineers, fits the data reasonably well. These findings suggest that subsidies to build technical talent ahead of demand are misplaced unless public policy makers have better information on future market conditions than the market participants do