We model the endogenous emergence of social perceptions about occupations and their impact on occupational choice. In particular, an individual’s social approval increases with his community's perception of his skill in his chosen career. These perceptions vary across communities because individuals better assess the skill of those in occupations similar to their own. Such imperfect assessment can distort choices away from comparative advantage. When skill distributions differ across occupations and/or correlate positively, the community perceives one occupation more favorably. This favored sector experiences overcrowding, but misallocation occurs across both sectors. Furthermore, a positive skill correlation can produce multiple steady states.

We develop a framework to empirically examine how politicians with electoral pressures control bureaucrats with career concerns and the consequent implications for bureaucrats' career investments. Unique microlevel data on Indian bureaucrats support our key predictions. Politicians use frequent reassignments (transfers) across posts of varying importance to control bureaucrats. High-skilled bureaucrats face less frequent political transfers and lower variability in the importance of their posts. We find evidence of two alternative paths to career success: officers of higher initial ability are more likely to invest in skill, but caste affinity to the politician's party base also helps secure important positions.

This paper studies the link between self-image and behavior among those who face stigma due to poverty and social exclusion. Using a randomized field experiment with sex workers in Kolkata (India), we examine whether a psychological intervention to mitigate adverse effects of internalized stigma can induce behavior change. We find significant improvements in participants' self-image, their savings choices, and health clinic visits. Administrative data confirm that these changes in savings and preventive health behavior persist 15 and 21 months later, respectively. Our findings highlight the potential of purely psychological interventions to improve the life choices and outcomes of marginalized groups.