Education and Unemployment
A major benefit of education is the lower risk of unemployment at higher educational levels. In PSID (Panel Study of Income Dynamics) data on the male labor force1 the reduction of the incidence of unemployment is found to be far more important than the reduced duration of unemployment in creating the educational differentials in unemployment rates. In turn, the lesser unemployment incidence of the more educated workers is, in about equal measure, due to their greater attachment to the firms employing them, and to the lesser risk of becoming unemployed when separated from the firm. The lesser frequency of job turnover of more educated workers, which creates fewer episodes of unemployment, is in large part attributable to more on-the-job training. In explaining the lesser conditional unemployment of educated workers and the somewhat shorter duration of their unemployment, indirect evidence is provided that (1) costs of on-the-job search for new employment relative to costs of searching while unemployed are lower for more educated workers; (2) that these workers are also more efficient in acquiring and processing job search information; and (3) that firms and workers search more intensively to fill more skilled vacancies.
|Date of creation:||Sep 1991|
|Date of revision:|
|Publication status:||published as Studies in Human Capital, Elgar Publishers, 1993|
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- Stafford, Frank & Duncan, Greg J., 1979. "The Use of Time and Technology by Households in the United States," Working Paper Series 21, Research Institute of Industrial Economics.
- Flinn, Christopher J & Heckman, James J, 1983.
"Are Unemployment and Out of the Labor Force Behaviorally Distinct Labor Force States?,"
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University of Chicago Press, vol. 1(1), pages 28-42, January.
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- Dale Mortensen, 1984.
"Job Search and Labor Market Analysis,"
594, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- John M. Barron & Wesley Mellow, 1979. "Search Effort in the Labor Market," Journal of Human Resources, University of Wisconsin Press, vol. 14(3), pages 389-404.
- Axel Borsch-Supan, 1987. "The Role of Education: Mobility Increasing or Mobility Impeding?," NBER Working Papers 2329, National Bureau of Economic Research, Inc.
- Jacob Mincer, 1986. "Wage Changes in Job Changes," NBER Working Papers 1907, National Bureau of Economic Research, Inc.
- Bartel, Ann P & Lichtenberg, Frank R, 1987. "The Comparative Advantage of Educated Workers in Implementing New Technology," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 1-11, February.
- Barron, John M & Black, Dan A & Loewenstein, Mark A, 1989. "Job Matching and On-the-Job Training," Journal of Labor Economics, University of Chicago Press, vol. 7(1), pages 1-19, January.
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