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Are specific skills an obstacle to labor market adjustment?

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  • Lamo, Ana
  • Messina, Julián
  • Wasmer, Etienne

Abstract

This paper shows that specialized education reduces workers' mobility and hence their ability to cope with economic changes. We illustrate this point using labor force data from two countries having experienced important macroeconomic turbulence; a large economy with rigid labor markets, Poland, and a small open economy with increased flexibility, Estonia. We find that holding a vocational degree is associated with much longer unemployment duration spells and higher likelihood of leaving activity for older workers. We then build a theoretical framework in which young agents' careers are heavily determined by the type of initial education, and analyze the transition to a new steady-state after a sectoral demand shift. Quantitative exercises suggest that the over-specialization of the labor force in Poland led to much higher and persistent unemployment compared to Estonia during the period of EU enlargement. Traditional labor market institutions (wage rigidity and employment protection) lead to an increase of the unemployment gap, but to a lesser extent.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 18 (2011)
Issue (Month): 2 (April)
Pages: 240-256

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Handle: RePEc:eee:labeco:v:18:y:2011:i:2:p:240-256

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Web page: http://www.elsevier.com/locate/labeco

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Keywords: Skill specificity Transition Vocational training Search and matching;

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References

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Cited by:
  1. Beker, Victor A., 2012. "A case study on trade liberalization: Argentina in the 1990s," Economics Discussion Papers 2012-3, Kiel Institute for the World Economy.
  2. Kenn Ariga & Giorgio Brunello & Roki Iwahashi & Lorenzo Rocco, 2006. "On the Efficiency Costs of Detracking Secondary Schools," Carlo Alberto Notebooks 35, Collegio Carlo Alberto.
  3. Brunello, Giorgio & Crivellaro, Elena & Rocco, Lorenzo, 2010. "Lost in Transition? The Returns to Education Acquired under Communism 15 Years after the Fall of the Berlin Wall," IZA Discussion Papers 5409, Institute for the Study of Labor (IZA).

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