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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, 713).

Record type: Monograph (Discussion Paper)


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.

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Published date: 31 October 2007
Keywords: uncertainty, labor contracts, specific human capital


Local EPrints ID: 49343
ISSN: 0966-4246
PURE UUID: 3c82c76c-68c5-4ee6-ba6e-db0d4ab00ddb

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Date deposited: 31 Oct 2007
Last modified: 17 Jul 2017 14:56

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Author: Martin Gervais
Author: Igor Livshits
Author: Cesaire Meh

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