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Career Progression, Economic Downturns, and Skills

  • Jean-Marc Robin

    (Sciences-Po)

  • Costas Meghir

    (Yale University)

  • Christian Dustmann

    (University College London)

  • Jerome Adda

    (European University Institute)

This paper analyzes the career progression of skilled and unskilled workers, with a focus on how careers are aected by economic downturns and whether formal skills, acquired early on, can shield workers from the eect of recessions. Using detailed administrative data for Germany for numerous birth cohorts across different regions, we follow workers from labor market entry onwards and estimate a dynamic life-cycle model of vocational training choice, labor supply, and wage progression. Most particularly, our model allows for labor market frictions that vary by skill group and over the business cycle. We find that sources of wage growth differ: learning-by-doing is an important component for unskilled workers early on in their careers, while job mobility is important for workers who acquire skills in an apprenticeship scheme before labor market entry. Likewise, economic downturns affect skill groups through very different channels: unskilled workers lose out from a decline in productivity and human capital, whereas skilled individuals suffer mainly from a lack of mobility.

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Paper provided by Society for Economic Dynamics in its series 2013 Meeting Papers with number 993.

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Date of creation: 2013
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Handle: RePEc:red:sed013:993
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