Uncertainty and the specificity of human capital


Gervais, Martin, Livshits, Igor and Meh, Cesaire (2007) Uncertainty and the specificity of human capital. Southampton, UK, University of Southampton, 43pp. (Discussion Papers in Economics and Econometrics, 0713).

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Description/Abstract

This paper studies the choice between general and specific human capital. A trade-off arises because general human capital, while less productive, can easily be reallocated across firms. Accordingly, the fraction of individuals with specific human capital depends on the amount of uncertainty in the economy. Our model implies that while economies with more specific human capital tend to be more productive, they also tend to be more vulnerable to turbulence. As such, our theory sheds some light on the experience of Japan, where human capital is notoriously specific: while Japan benefited from this predominately specific labor force in tranquil times, this specificity may also have been at the heart of its prolonged stagnation.

Item Type: Monograph (Discussion Paper)
ISSNs: 0966-4246 (print)
Related URLs:
Keywords: uncertainty, labor contracts, specific human capital
Subjects: H Social Sciences > HB Economic Theory
Divisions: University Structure - Pre August 2011 > School of Social Sciences > Economics
ePrint ID: 49343
Date Deposited: 31 Oct 2007
Last Modified: 27 Mar 2014 18:32
Publisher: University of Southampton
URI: http://eprints.soton.ac.uk/id/eprint/49343

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