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Labor Market Search and Schooling Investment

Author

Listed:
  • Christopher Flinn

Abstract

We generalize the standard search, matching, and bargaining framework to allow individuals to acquire productivity-enhancing schooling prior to labor market entry. As is well-known, search frictions and weakness in bargaining position contribute to under-investment from an efficiency perspective. In order to evaluate the sensitivity of schooling investments to "hold up," the model is estimated using Current Population Survey data. We focus on the impact of bargaining power on schooling investment, and find that the effects are large. A brief exploration of the two-sided investment model suggests that something akin to a "Hosios condition" result regarding the socially optimal surplus division rule may be attainable.

Suggested Citation

  • Christopher Flinn, 2011. "Labor Market Search and Schooling Investment," Carlo Alberto Notebooks 212, Collegio Carlo Alberto.
    • Handle: RePEc:cca:wpaper:212
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    Cited by:

    1. Stephanie de Mel, 2020. "A Job Worth Waiting for: Parental Wealth and Youth Unemployment in Ghana," IFS Working Papers W20/21, Institute for Fiscal Studies.
    2. Jung, Yeonha, 2023. "Formation of the legacy of slavery: Evidence from the US South," European Economic Review, Elsevier, vol. 154(C).
    3. Daniela Del Boca & Christopher Flinn & Ewout Verriest & Matthew Wiswall, 2018. "Actors in the Child Development Process," Carlo Alberto Notebooks 575, Collegio Carlo Alberto.
    4. Girsberger, Esther Mirjam & Meango, Romuald, 2022. "The Puzzle of Educated Unemployment in West Africa," IZA Discussion Papers 15721, Institute of Labor Economics (IZA).
    5. Roberto Bonilla & Francis Kiraly, 2024. "Male investment in schooling with frictional labour and marriage markets," Review of Economics of the Household, Springer, vol. 22(2), pages 359-385, June.
    6. Liu, Qianshuo & Macho-Stadler, Inés, 2023. "Education choices and job market characteristics," Economics Letters, Elsevier, vol. 223(C).
    7. Laporšek, Suzana & Orazem, Peter F. & Vodopivec, Milan & Vodopivec, Matija, 2024. "Long-term responses to large minimum wage shocks: Subminimum and super-minimum workers in Slovenia," Economic Systems, Elsevier, vol. 48(4).
    8. Maqbool H. Sial & Ghulam Sarwar & Mubashra Saeed, 2019. "Surplus Education and Earnings Differentials in Pakistan: A Quantile Regression Analysis," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 24(2), pages 93-114, July-Dec.
    9. Matteo Bobba & Luca Flabbi & Santiago Levy, 2022. "Labor Market Search, Informality, And Schooling Investments," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(1), pages 211-259, February.
    10. Yujing Xu, 2022. "Unobservable investments, trade efficiency and search frictions," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(2), pages 764-799, May.
    11. Christine Braun, 2019. "Crime and the minimum wage," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 32, pages 122-152, April.
    12. Girsberger, Esther Mirjam & Koomen, Miriam & Krapf, Matthias, 2022. "Interpersonal, cognitive, and manual skills: How do they shape employment and wages?," Labour Economics, Elsevier, vol. 78(C).
    13. Alessandra Bonfiglioli & Gino Gancia, 2019. "Heterogeneity, selection and labor market disparities," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 305-325, January.
    14. Bowlus, Audra & Wong, Yuet-Yee Linda, 2024. "High school to work: How did Millennials fare?," Economics Letters, Elsevier, vol. 245(C).
    15. Daniela Del Boca & Christopher Flinn & Ewout Verriest & Matthew Wiswall, 2018. "Actors in the Child Development Process," Carlo Alberto Notebooks 575, Collegio Carlo Alberto.
    16. Fiaschi, Davide & Tealdi, Cristina, 2020. "Winners and Losers of Immigration," IZA Discussion Papers 13600, Institute of Labor Economics (IZA).
    17. Wong, Yuet-Yee, 2024. "A dynamic duration approach to venture capital exit," Finance Research Letters, Elsevier, vol. 68(C).
    18. Zachariah Rutledge & Timothy J. Richards & John D. Lowrey, 2026. "Health coverage and farmworker productivity," American Journal of Agricultural Economics, John Wiley & Sons, vol. 108(1), pages 309-335, January.
    19. Gicheva, Dora, 2012. "Worker mobility, employer-provided general training, and the choice of graduate education," Labour Economics, Elsevier, vol. 19(2), pages 232-240.
    20. Jackson, Paul, 2023. "Equilibrium underemployment," Labour Economics, Elsevier, vol. 81(C).
    21. Manuel Macera & Hitoshi Tsujiyama, 2024. "Inequality and technological change," Quantitative Economics, Econometric Society, vol. 15(2), pages 427-451, May.
    22. Esther Mirjam Girsberger & Miriam Rinawi & Matthias Krapf, 2018. "Wages and employment: The role of occupational skills," Economics of Education Working Paper Series 0153, University of Zurich, Department of Business Administration (IBW).
    23. Darong Dai & Guoqiang Tian, 2020. "On the Efficiency of Wage-Setting Mechanisms with Search Frictions and Human Capital Investment," Annals of Economics and Finance, Society for AEF, vol. 21(1), pages 1-40, May.
    24. Cervantes, Carla Varona & Cooper, Russell, 2022. "Labor market implications of education mismatch," European Economic Review, Elsevier, vol. 148(C).
    25. repec:ags:aaea22:335436 is not listed on IDEAS

    More about this item

    Keywords

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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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