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Accumulation of Human Capital and the Business Cycle


  • Fukao, Kyoji
  • Otaki, Masayuki


Characteristics of business cycles are quite different across developed countries. Real wages and working hours a re less sensitive to exogenous shocks in the United States than in Brit ain and Japan. Using a model with a microeconomic foundation, this paper provides an economic explanation of these differences. The cost of on-the-job training plays a crucial role. Workers seldom quit their jobs when the sunk training cost is high. In such economies, varianc es in employment and output become small and shocks tend to be absorbed by working hours and real wages. Thus, these characteristics do not necessarily indicate that the economy is more efficient. Copyright 1993 by University of Chicago Press.

Suggested Citation

  • Fukao, Kyoji & Otaki, Masayuki, 1993. "Accumulation of Human Capital and the Business Cycle," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 73-99, February.
  • Handle: RePEc:ucp:jpolec:v:101:y:1993:i:1:p:73-99

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    References listed on IDEAS

    1. Mark Bagnoli & Ted Bergstrom, 2005. "Log-concave probability and its applications," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(2), pages 445-469, August.
    2. Flinn, Christopher J & Heckman, James J, 1983. "Are Unemployment and Out of the Labor Force Behaviorally Distinct Labor Force States?," Journal of Labor Economics, University of Chicago Press, vol. 1(1), pages 28-42, January.
    3. Bergstrom, Ted & Schoeni, Robert F, 1996. "Income Prospects and Age-at-Marriage," Journal of Population Economics, Springer;European Society for Population Economics, vol. 9(2), pages 115-130, May.
    4. Roth, Alvin E. & Sotomayor, Marilda, 1992. "Two-sided matching," Handbook of Game Theory with Economic Applications,in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 16, pages 485-541 Elsevier.
    5. Keeley, Michael C, 1977. "The Economics of Family Formation," Economic Inquiry, Western Economic Association International, vol. 15(2), pages 238-250, April.
    6. Becker, Gary S, 1974. "A Theory of Marriage: Part II," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages 11-26, Part II, .
    7. Egbert Dierker, 1989. "Competition for Customers," Discussion Paper Serie A 244, University of Bonn, Germany.
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    Cited by:

    1. Kawai, Eizo, 2001. "Re-examination of wage, employment, and hours adjustments: what is crucial for differences in the adjustments?," Japan and the World Economy, Elsevier, vol. 13(4), pages 483-497, December.
    2. Shin-ichi Fukuda & Robert F. Owen, 2008. "Human Capital and Economic Growth: Dynamic Implications of Insider-outsider Problem for Macroeconomics," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 4(1), pages 133-158, December.
    3. Fabio MĂ©ndez & Facundo SepĂșlveda, 2012. "The Cyclicality of Skill Acquisition: Evidence from Panel Data," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(3), pages 128-152, July.
    4. Kozo Kiyota & Toshiyuki Matsuura, 2006. "Employment of MNEs in Japan: New Evidence," Discussion papers 06014, Research Institute of Economy, Trade and Industry (RIETI).
    5. repec:sls:ipmsls:v:33:y:2017:6 is not listed on IDEAS

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