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Career progression, economic downturns and skills

Author

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  • Jerome Adda
  • Christian Dustmann
  • Costas Meghir
  • Jean-Marc Robin

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 progression. 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.

Suggested Citation

  • Jerome Adda & Christian Dustmann & Costas Meghir & Jean-Marc Robin, 2013. "Career progression, economic downturns and skills," CeMMAP working papers 06/13, Institute for Fiscal Studies.
  • Handle: RePEc:azt:cemmap:06/13
    DOI: 10.1920/wp.cem.2013.0613
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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 2014-10-23 16:26:43
    2. Career progression, economic downturns, and skills
      by maximorossi in NEP-LTV blog on 2013-09-25 17:18:58

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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality

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