Advanced Search
MyIDEAS: Login to save this paper or follow this series

Dynamic Skills Acquisition Choice - Jacks of All Trades vs. Dab Hands

Contents:

Author Info

  • Andrei Sarychev

    (Massachusetts Institute of Technology)

Registered author(s):

    Abstract

    This paper proposes a dynamic theory of adjustment of labor force to a shock that makes existing human capital stock obsolete. Workers will not invest in the new, superior skills because their current value depends on the existing complementary stock of human capital, and the obsolete specialized skills are largely incompatible with the new specialized skills. Labor market imperfections make the current distribution of skills a factor in the decision to invest in new skills. This creates room for generalists, workers with an intermediate set of skills who are able to work with both old and new types. Along the equilibrium path the economy accumulates a buffer stock of generalists that eventually makes it profitable to invest in superior specialization. Instead of focusing on steady states, the paper proposes new methods of studying the short-run adjustment in search models with forward-looking investment. It characterizes the dynamics of transition and analyzes how equilibrium paths differ across countries with diverse labor market and educational institutions. The efficiency analysis allows drawing policy implications. Econometric evidence on labor markets in transition economies is shown to be broadly consistent with predictions of the model. East Germany presents a stark example of rapid transition that is difficult to explain by traditional theories but is consistent with the predictions of my model.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://fmwww.bc.edu/RePEc/es2000/1646.pdf
    File Function: main text
    Download Restriction: no

    Bibliographic Info

    Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1646.

    as in new window
    Length:
    Date of creation: 01 Aug 2000
    Date of revision:
    Handle: RePEc:ecm:wc2000:1646

    Contact details of provider:
    Phone: 1 212 998 3820
    Fax: 1 212 995 4487
    Email:
    Web page: http://www.econometricsociety.org/pastmeetings.asp
    More information through EDIRC

    Related research

    Keywords:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:ecm:wc2000:1646. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.