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Endogenous skill cycles

  • Busato, Francesco
  • Marchetti, Enrico

This paper explores the ability of a class of one-sector models to generate endogenous skills cycles. Skills cycles are here defined as endogenous fluctuations of the composition of equilibrium allocation of labor services. We consider a one sector economy in which there exist one type of capital stock and a finite number of different labor services, which are assumed to be heterogeneous along the skill/productivity dimension. We apply the Hopf bifurcation theorem and provide necessary conditions on the model's parameters for having a closed orbit as the economy's stable set. We also develop a numerical example (based on the United States economy) showing how this closed orbit can appear under reasonable parameter values.

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Article provided by Elsevier in its journal Research in Economics.

Volume (Year): 64 (2010)
Issue (Month): 3 (September)
Pages: 175-185

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Handle: RePEc:eee:reecon:v:64:y:2010:i:3:p:175-185
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622941

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