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Offshoring and Occupational Specificity of Human Capital

  • Moritz Ritter

    ()

    (Department of Economics, Temple University)

I document that workers in newly tradable service occupations possess more occupation-specific human capital and are more highly educated than workers in previously tradable occupations. Motivated by this observation, I develop a dynamic equilibrium model with labor market frictions and specific human capital to study the labor adjustment process after a trade shock. When calibrated to match the increase in U.S. trade between 1990 and 2010, the model suggests that (1) output increases immediately after a trade shock and converges quickly to the steady state; (2) labor market institutions play a larger role in the adjustment process than specific human capital; (3) the short run distributional effects are small if the labor market is flexible, even in the presence of specific human capital.

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File URL: http://www.cla.temple.edu/RePEc/documents/DETU_12_07.pdf
File Function: First Version, 2012
Download Restriction: no

Paper provided by Department of Economics, Temple University in its series DETU Working Papers with number 1207.

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Date of creation: Dec 2012
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Handle: RePEc:tem:wpaper:1207
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Web page: http://www.cla.temple.edu/economics/

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