The Business Cycle Human Capital Accumulation Nexus and its Effect on Labor Supply Volatility

Diana Alessandrini, Stephen Kosempel and Thanasis Stengos

Working Paper series from Rimini Centre for Economic Analysis

Abstract: This paper studies the cyclicality of human capital accumulation by using a lifecycle RBC model with two types of heterogeneity: age and productivity in learning. Results show that individuals invest more in human capital during economic downturns. In particular, schooling acts as a buffer sector and allows agents to compensate for the shock by accumulating more human capital. However, human capital accumulation is more countercyclical for young and low-productivity individuals because they face lower opportunity costs of education and a higher marginal product of human capital. These results are confirmed empirically using US data from the Current Population Survey.

Keywords: human capital accumulation; business cycles; labor supply (search for similar items in EconPapers)
JEL-codes: E32 J22 J24 (search for similar items in EconPapers)
Date: 2012-08
New Economics Papers: this item is included in nep-dge, nep-hrm, nep-lab and nep-lma
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http://www.rcea.org/RePEc/pdf/wp62_12.pdf (application/pdf)

Related works:
Working Paper: The business cycle human capital accumulation nexus and its effect on hours worked volatility (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:rim:rimwps:62_12

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