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Career progression, economic downturns and skills

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Author Info

  • Jerome Adda

    (Institute for Fiscal Studies and European University Institute)

  • Christian Dustmann

    ()
    (Institute for Fiscal Studies and University College London)

  • Costas Meghir

    (Institute for Fiscal Studies and Yale University)

  • Jean-Marc Robin

    ()
    (Institute for Fiscal Studies and Sciences Po)

Abstract

This paper analyses 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 labour market entry onwards and estimate a dynamic life-cycle model of vocational training choice, labour supply and wage pogression. Most particularly, our model allows for labour 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 labour 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 lack of mobility.

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Bibliographic Info

Paper provided by Centre for Microdata Methods and Practice, Institute for Fiscal Studies in its series CeMMAP working papers with number CWP06/13.

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Date of creation: Mar 2013
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Handle: RePEc:ifs:cemmap:06/13

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Keywords: Wage determination; skills; business cycles; apprenticeship training; job mobility;

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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 Heckman & Tim Kautz, 2013. "Fostering and Measuring Skills: Interventions That Improve Character and Cognition," Working Papers 2013-019, Human Capital and Economic Opportunity Working Group.

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