Labor Market Search and Schooling Investment
AbstractWe generalize the standard search, matching, and bargaining framework to allow individuals to acquire productivity-enhancing schooling prior to labor market entry. As is wellknown, search frictions and weakness in bargaining position contribute to under-investment from an efficiency perspective. In order to evaluate the sensitivity of schooling investments to “hold up,” the model is estimated using Current Population Survey data. We focus on the impact of bargaining power on schooling investment, and find that the effects are large in the partial equilibrium version of the model. However, large increases in bargaining power in the general equilibrium version of the model choke off firm vacancy creation and actually reduce the level of schooling investment.
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Bibliographic InfoPaper provided by Collegio Carlo Alberto in its series Carlo Alberto Notebooks with number 295.
Length: 48 pages
Date of creation: 2013
Date of revision:
Labor market search; schooling choice; hold-up; Nash bargaining.;
Other versions of this item:
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-30 (All new papers)
- NEP-DGE-2013-03-30 (Dynamic General Equilibrium)
- NEP-LAB-2013-03-30 (Labour Economics)
- NEP-LMA-2013-03-30 (Labor Markets - Supply, Demand, & Wages)
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- Gicheva, Dora, 2012. "Worker mobility, employer-provided general training, and the choice of graduate education," Labour Economics, Elsevier, vol. 19(2), pages 232-240.
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