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Career Progression, Economic Downturns, and Skills

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Author Info

  • Jerome Adda

    (European University Institute)

  • Christian Dustmann

    (University College London)

  • Costas Meghir

    ()
    (Cowles Foundation, Yale University)

  • Jean-Marc Robin

    (Sciences Po, Paris and University College London)

Abstract

This paper analyzes the career progression of skilled and unskilled workers, with a focus on how careers are affected by economic downturns and whether formal skills, acquired early on, can shield workers from the effect of recessions. Using detailed administrative data for Germany for numerous birth cohorts across different regions, we follow workers from labor market entry onwards and estimate a dynamic life-cycle model of vocational training choice, labor supply, and wage progression. Most particularly, our model allows for labor market frictions that vary by skill group and over the business cycle. We find that sources of wage growth differ: learning-by-doing is an important component for unskilled workers early on in their careers, while job mobility is important for workers who acquire skills in an apprenticeship scheme before labor market entry. Likewise, economic downturns affect skill groups through very different channels: unskilled workers lose out from a decline in productivity and human capital, whereas skilled individuals suffer mainly from a lack of mobility.

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File URL: http://cowles.econ.yale.edu/P/cd/d18b/d1889.pdf
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Bibliographic Info

Paper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1889.

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Length: 61 pages
Date of creation: Feb 2013
Date of revision:
Handle: RePEc:cwl:cwldpp:1889

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Postal: Yale University, Box 208281, New Haven, CT 06520-8281 USA
Phone: (203) 432-3702
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Web page: http://cowles.econ.yale.edu/
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Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA

Related research

Keywords: Wage determination; Skills; Business cycles; Apprenticeship Training; Job Mobility; Human Capital;

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References

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Career progression, economic downturns, and skills
    by maximorossi in NEP-LTV blog on 2013-09-25 12:18:58
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Cited by:
  1. James J. Heckman & Tim Kautz, 2013. "Fostering and Measuring Skills: Interventions That Improve Character and Cognition," NBER Working Papers 19656, National Bureau of Economic Research, Inc.

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