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Born to be Unemployed: Unemployment and Wages over the Business Cycle


  • Rubinstein, Y.
  • Tsiddon, D.


This work decomposes the human capital bundle into two characteristics: "knowledge", associated with one's own education ane experience, and "general skills", associated with parent's education. Using this decomposition we provide a new set of observations on the cyclicability ofboth wages and employment.

Suggested Citation

  • Rubinstein, Y. & Tsiddon, D., 1999. "Born to be Unemployed: Unemployment and Wages over the Business Cycle," Papers 39-99, Tel Aviv.
  • Handle: RePEc:fth:teavfo:39-99

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    References listed on IDEAS

    1. Assaf Razin & Efraim Sadka & Chi-Wa Yuen, 1999. "An Information-Based Model of Foreign Direct Investment: The Gains from Trade Revisited," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 6(4), pages 579-596, November.
    2. Razin, A. & Sadka, E. & Yuen, C.W., 1997. "Implications of the Home Bias: A Pecking Order of Capital Inflows and Corrective Taxation," Papers 32-97, Tel Aviv.
    3. Razin, Assaf & Sadka, Efraim & Yuen, Chi-Wa, 1998. "A pecking order of capital inflows and international tax principles," Journal of International Economics, Elsevier, vol. 44(1), pages 45-68, February.
    4. Gordon, Roger H & Bovenberg, A Lans, 1996. "Why Is Capital So Immobile Internationally? Possible Explanations and Implications for Capital Income Taxation," American Economic Review, American Economic Association, vol. 86(5), pages 1057-1075, December.
    5. Helpman, Elhanan & Razin, Assaf, 1983. "Increasing returns, monopolistic competition, and factor movements : A welfare analysis," Journal of International Economics, Elsevier, vol. 14(3-4), pages 263-276, May.
    6. Obstfeld, Maurice, 1994. "Risk-Taking, Global Diversification, and Growth," American Economic Review, American Economic Association, vol. 84(5), pages 1310-1329, December.
    7. Bernanke, Ben & Gertler, Mark, 1989. "Agency Costs, Net Worth, and Business Fluctuations," American Economic Review, American Economic Association, vol. 79(1), pages 14-31, March.
    8. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    9. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    10. Townsend, Robert M., 1979. "Optimal contracts and competitive markets with costly state verification," Journal of Economic Theory, Elsevier, vol. 21(2), pages 265-293, October.
    11. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
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    Cited by:

    1. Jacobs, Bas, 2007. "Real options and human capital investment," Labour Economics, Elsevier, vol. 14(6), pages 913-925, December.
    2. Barlevy, Gadi & Tsiddon, Daniel, 2006. "Earnings inequality and the business cycle," European Economic Review, Elsevier, vol. 50(1), pages 55-89, January.
    3. Dellas, Harris & Koubi, Vally, 2003. "Business cycles and schooling," European Journal of Political Economy, Elsevier, vol. 19(4), pages 843-859, November.
    4. Kandel, Eugene & Pearson, Neil D., 2001. "Flexibility versus Commitment in Personnel Management," Journal of the Japanese and International Economies, Elsevier, vol. 15(4), pages 515-556, December.
    5. Melissa Osborne & Herbert Gintis & Samuel Bowles, 2001. "The Determinants of Earnings: A Behavioral Approach," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1137-1176, December.

    More about this item



    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search


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