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On the Industry Specificity of Human Capital and Business Cycles

Author

Listed:
  • Vahagn Jerbashian

    (Universitat de Barcelona)

  • Sergey Slobodyan

    (CERGE-EI)

  • Evangelia Vourvachaki

    (Bank of Greece)

Abstract

We define specific (general) human capital as the set of occupations whose use is spread in a limited (wide) set of industries. Using the EU Labor Force Survey database, we identify these human capital types and analyze their employment and education. This exercise yields a persistent assignment of occupations into specific and general human capital types. The share of specific human capital varies across countries and has declined over time almost everywhere.We consider a stylized two-sector model where one of the sectors uses both types of human capital and the other specializes on general human capital. We show that a mean preserving increase in the share of specific human capital reduces (increases) the contribution of shocks in non-specialized sector and increases (reduces) the contribution of shocks in specialized sector to the variance of final output, when sectoral outputs are gross complements (substitutes).

Suggested Citation

  • Vahagn Jerbashian & Sergey Slobodyan & Evangelia Vourvachaki, 2016. "On the Industry Specificity of Human Capital and Business Cycles," UB School of Economics Working Papers 2016/335, University of Barcelona School of Economics.
    • Handle: RePEc:ewp:wpaper:335web
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    More about this item

    Keywords

    Specific and General Human Capital Types; Propagation of Sectoral Shocks; Output Volatility.;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • I20 - Health, Education, and Welfare - - Education - - - General
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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