IDEAS home Printed from https://ideas.repec.org/p/red/sed013/1022.html
   My bibliography  Save this paper

Cyclical Employment and Learning Ability

Author

Listed:
  • Jongsuk Han

    (University of Rochester)

Abstract

I empirically document that ability is an important determinant of individual employment rates over the business cycle. Using the Armed Forces Qualication Test score as a proxy for individual ability, I find that high ability workers have a less procyclical employment rate than low ability workers even after conditioning on experience, education or average hourly wage. Moreover, the ability and education effect on employment cyclicality decreases over the life-cycle but the ability effect decreases much more gradually than the education effect. In the second part of the paper, I build a life-cycle model with human capital accumulation through learning-by-doing where agents have heterogeneous learning ability. High ability agents have a steeper human capital accumulation slope which delivers high future labor income. In recession, employment rates for all agents fall due to low labor income. However, high ability agents' employment rate decreases less than others because the current employment increases future labor income. The calibrated model, which simultaneously matches employment and wage proles, is consistent with the major cyclical properties observed in the data.

Suggested Citation

  • Jongsuk Han, 2013. "Cyclical Employment and Learning Ability," 2013 Meeting Papers 1022, Society for Economic Dynamics.
  • Handle: RePEc:red:sed013:1022
    as

    Download full text from publisher

    File URL: https://economicdynamics.org/meetpapers/2013/paper_1022.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Paul Gomme & Richard Rogerson & Peter Rupert & Randall Wright, 2005. "The Business Cycle and the Life Cycle," NBER Chapters,in: NBER Macroeconomics Annual 2004, Volume 19, pages 415-592 National Bureau of Economic Research, Inc.
    2. Rui Castro & Daniele Coen-Pirani, 2008. "WHY HAVE AGGREGATE SKILLED HOURS BECOME SO CYCLICAL SINCE THE MID-1980s?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(1), pages 135-185, February.
    3. Blackburn, McKinley L & Neumark, David, 1993. "Omitted-Ability Bias and the Increase in the Return to Schooling," Journal of Labor Economics, University of Chicago Press, vol. 11(3), pages 521-544, July.
    4. H. J. Holzer & R. J. LaLonde, "undated". "Job Change and Job Stability among Less-Skilled Young Workers," Institute for Research on Poverty Discussion Papers 1191-99, University of Wisconsin Institute for Research on Poverty.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:red:sed013:1022. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann). General contact details of provider: http://edirc.repec.org/data/sedddea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.