General versus Specific Skills in Labor Markets with Search Frictions and Firing Costs
- 1 May 2006
- journal article
- Published by American Economic Association in The American Economic Review
- Vol. 96 (3), 811-831
- https://doi.org/10.1257/aer.96.3.811
Abstract
Human capital investments are not independent of the aggregate state of labor markets: frictions and slackness of the labor market raise the returns to specific human capital investments relative to general investments. We build a macroeconomic model with two pure strategy regimes. In the pure G-regime, workers invest in general skills. This occurs when they face high turnover labor markets and in the absence of employment protection. The pure 5-regime in which workers invest in skills specific to their job appears when employment protection is high enough. Implications for a characterization of Europe-United States differences are provided in conclusion.Keywords
Other Versions
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