research product . 2011 . Embargo end date: 16 Jun 2017

Human Capital Formation on Skill-Specific Labor Markets

Xie, Runli;
  • Published: 21 Feb 2011
  • Publisher: Humboldt-Universität zu Berlin, Wirtschaftswissenschaftliche Fakultät
Human capital investment is formed through households' endogenous decision, and competes with physical capital investment. Idiosyncratic shock shifts the skilled labor share and changes tightness in both skilled and unskilled markets. Given inelastic labor participation, the model can generate downward-sloping Beveridge curves in aggregate, skilled and unskilled labor markets. Upon a neutral shock, total unemployment decrease is two-staged: firstly with a reduction in unskilled unemployment, and then due to a sharp decline of skilled unemployment when skill substitution dominates. A higher elasticity of substitution between two types of labor leads to higher vol...
free text keywords: search and matching, skill-specific unemployment, human capital investment, idiosyncratic shock, skill substitution, 330 Wirtschaft
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