Loss of Skill during Unemployment and TFP Differences across Countries

Victor Ortego-Marti

No 201513, Working Papers from University of California at Riverside, Department of Economics

Abstract: In an economy with search and matching frictions in which workers lose human capital during unemployment, TFP becomes endogenous and depends on workers’ unemployment history. Using available estimates of labor market flows for a sample of OECD countries, this paper quantifies the amount of TFP differences due to skill losses during unemployment. Continental European countries, with their low job finding rates, exhibit the lowest TFPs. Nordic countries and Japan display the highest levels of TFP due to their high job finding rate relative to the separation rate. TFP in Anglo-Saxon countries stands in-between the two groups. The paper further studies the effect of hiring subsidies on the labor market and TFP.

Date: 2015-12
New Economics Papers: this item is included in nep-dge and nep-lma
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https://economics.ucr.edu/repec/ucr/wpaper/201513.pdf First version, 2015 (application/pdf)

Related works:
Journal Article: Loss of skill during unemployment and TFP differences across countries (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ucr:wpaper:201513

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