Human Capital Formation on Skill-Specific Labor Markets
This paper focuses on the dynamic link between skill-specific labor markets with search frictions. Human capital investment is formed through households' endogenous decision, and competes with physical capital investment. Idiosyncratic shock shifts the skilled labor share and changes tightness in both skilled and unskilled markets. Given inelastic labor participation, the model can generate downward-sloping Beveridge curves in aggregate, skilled and unskilled labor markets. Upon a neutral shock, total unemployment decrease is two-staged: firstly with a reduction in unskilled unemployment, and then due to a sharp decline of skilled unemployment when skill substitution dominates. A higher elasticity of substitution between two types of labor leads to higher volatility of the model variables and higher u - v correlation.
|Date of creation:||Feb 2011|
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- Huggett, Mark & Kaplan, Greg, 2011.
"Human capital values and returns: Bounds implied by earnings and asset returns data,"
Journal of Economic Theory,
Elsevier, vol. 146(3), pages 897-919, May.
- Mark Huggett, 2010. "Human Capital Values and Returns: Bounds Implied By Earnings and Asset Returns Data," 2010 Meeting Papers 564, Society for Economic Dynamics.
- Mark Huggett & Greg Kaplan, 2010. "Human capital values and returns: bounds implied by earnings and asset returns data," Staff Report 448, Federal Reserve Bank of Minneapolis.
- Mark Huggett and Greg Kaplan, 2010. "Human Capital Values and Returns:Bounds Implied By Earnings and Asset Returns Data," Working Papers gueconwpa~10-10-02, Georgetown University, Department of Economics.
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