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Matching frictions and the divide of schooling investment between general and specific skills

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  • Decreuse, Bruno
  • Granier, Pierre

Abstract

This paper examines the impact of labor market frictions and institutions on the divide of schooling investment between general and specific skills. We offer a simple matching model of unemployment in which individuals determine the scope and intensity of their skills. In partial equilibrium, we show that the severity of market frictions distorts the schooling allocation towards more general skills. Then, we endogenize job creation and argue that changes in labor market institutions may well originate a non-monotonous relationship between unemployment and the divide of skills between specific and general human capital. We also investigate more carefully the impacts of unemployment compensation, minimum wage and firing costs. We suggest that unemployment compensation has an ambiguous impact on the skill divide, while minimum wage and firing costs are detrimental to general skill acquisition.

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File URL: http://mpra.ub.uni-muenchen.de/6948/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6948.

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Date of creation: Dec 2007
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Handle: RePEc:pra:mprapa:6948

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Keywords: Matching frictions; education; general and specific skills; labour market institutions;

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  1. Laing, Derek & Palivos, Theodore & Wang, Ping, 1995. "Learning, Matching and Growth," Review of Economic Studies, Wiley Blackwell, vol. 62(1), pages 115-29, January.
  2. Booth, Alison L. & Chatterji, Monojit, 1996. "Unions and efficient training," ISER Working Paper Series 96-13, Institute for Social and Economic Research.
  3. Cahuc, Pierre & Michel, Philippe, 1996. "Minimum wage unemployment and growth," European Economic Review, Elsevier, vol. 40(7), pages 1463-1482, August.
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Cited by:
  1. Gaetano Lisi & Maurizio Pugno, 2010. "The Underground Economy in a Matching Model of Endogenous Growth," Working Papers 2010-07, Universita' di Cassino, Dipartimento di Scienze Economiche.

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