Are specific skills an obstacle to labor market adjustment?

Ana Lamo, Julián Messina, Etienne Wasmer

Research output: Contribution to journalArticle

Abstract

This paper shows that specialized education reduces workers' mobility and hence their ability to cope with economic changes. We illustrate this point using labor force data from two countries having experienced important macroeconomic turbulence; a large economy with rigid labor markets, Poland, and a small open economy with increased flexibility, Estonia. We find that holding a vocational degree is associated with much longer unemployment duration spells and higher likelihood of leaving activity for older workers. We then build a theoretical framework in which young agents' careers are heavily determined by the type of initial education, and analyze the transition to a new steady-state after a sectoral demand shift. Quantitative exercises suggest that the over-specialization of the labor force in Poland led to much higher and persistent unemployment compared to Estonia during the period of EU enlargement. Traditional labor market institutions (wage rigidity and employment protection) lead to an increase of the unemployment gap, but to a lesser extent.

Original languageEnglish (US)
Pages (from-to)240-256
Number of pages17
JournalLabour Economics
Volume18
Issue number2
DOIs
StatePublished - Apr 1 2011

Fingerprint

Labour market adjustment
Labor force
Unemployment
Poland
Estonia
Education
Labor market institutions
Economic change
Older workers
Turbulence
Employment protection
Macroeconomics
Unemployment duration
Wage rigidity
Labour market
Theoretical framework
EU enlargement
Worker mobility
Large economy
Small open economy

Keywords

  • Search and matching
  • Skill specificity
  • Transition
  • Vocational training

ASJC Scopus subject areas

  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management

Cite this

Are specific skills an obstacle to labor market adjustment? / Lamo, Ana; Messina, Julián; Wasmer, Etienne.

In: Labour Economics, Vol. 18, No. 2, 01.04.2011, p. 240-256.

Research output: Contribution to journalArticle

Lamo, Ana ; Messina, Julián ; Wasmer, Etienne. / Are specific skills an obstacle to labor market adjustment?. In: Labour Economics. 2011 ; Vol. 18, No. 2. pp. 240-256.
@article{b9849e98555b4ee8a997dd898bcba88b,
title = "Are specific skills an obstacle to labor market adjustment?",
abstract = "This paper shows that specialized education reduces workers' mobility and hence their ability to cope with economic changes. We illustrate this point using labor force data from two countries having experienced important macroeconomic turbulence; a large economy with rigid labor markets, Poland, and a small open economy with increased flexibility, Estonia. We find that holding a vocational degree is associated with much longer unemployment duration spells and higher likelihood of leaving activity for older workers. We then build a theoretical framework in which young agents' careers are heavily determined by the type of initial education, and analyze the transition to a new steady-state after a sectoral demand shift. Quantitative exercises suggest that the over-specialization of the labor force in Poland led to much higher and persistent unemployment compared to Estonia during the period of EU enlargement. Traditional labor market institutions (wage rigidity and employment protection) lead to an increase of the unemployment gap, but to a lesser extent.",
keywords = "Search and matching, Skill specificity, Transition, Vocational training",
author = "Ana Lamo and Juli{\'a}n Messina and Etienne Wasmer",
year = "2011",
month = "4",
day = "1",
doi = "10.1016/j.labeco.2010.09.006",
language = "English (US)",
volume = "18",
pages = "240--256",
journal = "Labour Economics",
issn = "0927-5371",
publisher = "Elsevier",
number = "2",

}

TY - JOUR

T1 - Are specific skills an obstacle to labor market adjustment?

AU - Lamo, Ana

AU - Messina, Julián

AU - Wasmer, Etienne

PY - 2011/4/1

Y1 - 2011/4/1

N2 - This paper shows that specialized education reduces workers' mobility and hence their ability to cope with economic changes. We illustrate this point using labor force data from two countries having experienced important macroeconomic turbulence; a large economy with rigid labor markets, Poland, and a small open economy with increased flexibility, Estonia. We find that holding a vocational degree is associated with much longer unemployment duration spells and higher likelihood of leaving activity for older workers. We then build a theoretical framework in which young agents' careers are heavily determined by the type of initial education, and analyze the transition to a new steady-state after a sectoral demand shift. Quantitative exercises suggest that the over-specialization of the labor force in Poland led to much higher and persistent unemployment compared to Estonia during the period of EU enlargement. Traditional labor market institutions (wage rigidity and employment protection) lead to an increase of the unemployment gap, but to a lesser extent.

AB - This paper shows that specialized education reduces workers' mobility and hence their ability to cope with economic changes. We illustrate this point using labor force data from two countries having experienced important macroeconomic turbulence; a large economy with rigid labor markets, Poland, and a small open economy with increased flexibility, Estonia. We find that holding a vocational degree is associated with much longer unemployment duration spells and higher likelihood of leaving activity for older workers. We then build a theoretical framework in which young agents' careers are heavily determined by the type of initial education, and analyze the transition to a new steady-state after a sectoral demand shift. Quantitative exercises suggest that the over-specialization of the labor force in Poland led to much higher and persistent unemployment compared to Estonia during the period of EU enlargement. Traditional labor market institutions (wage rigidity and employment protection) lead to an increase of the unemployment gap, but to a lesser extent.

KW - Search and matching

KW - Skill specificity

KW - Transition

KW - Vocational training

UR - http://www.scopus.com/inward/record.url?scp=79951770126&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=79951770126&partnerID=8YFLogxK

U2 - 10.1016/j.labeco.2010.09.006

DO - 10.1016/j.labeco.2010.09.006

M3 - Article

VL - 18

SP - 240

EP - 256

JO - Labour Economics

JF - Labour Economics

SN - 0927-5371

IS - 2

ER -