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Labor Market Flexibility and General and Firm-specific Skills

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  • Naoki Shintoyo

    (Ryukoku University)

Abstract

The current economy is subject to great uncertainty. Smooth labor reallocations are important. This calls for labor market policies that increase flexibility. Conventional wisdom suggests that such policies will increase general skills and reduce firm-specific skills. This study demonstrates that this conjecture is not a theoretical necessity. Indeed, increased labor market flexibility can depress both general and firm-specific skills. If flexibility increases in the experienced worker market, general and firm-specific skills increase or decrease simultaneously. The reason for this surprising outcome emerges from the model.

Suggested Citation

  • Naoki Shintoyo, 2023. "Labor Market Flexibility and General and Firm-specific Skills," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 51(4), pages 275-286, December.
    • Handle: RePEc:kap:atlecj:v:51:y:2023:i:4:d:10.1007_s11293-023-09783-8
    DOI: 10.1007/s11293-023-09783-8
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    References listed on IDEAS

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