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Specific Human Capital and Wait Unemployment

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  • Herz, Benedikt

Abstract

A displaced worker might rationally prefer to wait through a long spell of unemployment instead of seeking employment at a lower wage in a job he is not trained for. I evaluate this trade-off using micro-data on displaced workers. To achieve identification, I exploit that the more a worker invested in occupation-specific human capital the more costly it is for him to switch occupations and the higher is therefore his incentive to wait. I find that between 9% and 18% of total unemployment in the United States can be attributed to wait unemployment.

Suggested Citation

  • Herz, Benedikt, 2017. "Specific Human Capital and Wait Unemployment," MPRA Paper 76777, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:76777
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    File URL: https://mpra.ub.uni-muenchen.de/76777/1/MPRA_paper_76777.pdf
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    References listed on IDEAS

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    Cited by:

    1. Herz, Benedikt & van Rens, Thijs, 2015. "Accounting for Mismatch Employment," Economic Research Papers 270222, University of Warwick - Department of Economics.

    More about this item

    Keywords

    wait unemployment; rest unemployment; specific human capital; worker mobility; mismatch; displaced workers;

    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
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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