Human capital ladders, cyclical sorting, and hysteresis

Edoardo Acabbi (), Andrea Alati () and Luca Mazzone ()
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Edoardo Acabbi: Universidad Carlos III de Madrid
Andrea Alati: Bank of England, Postal: Bank of England, Threadneedle Street, London, EC2R 8AH
Luca Mazzone: International Monetary Fund

No 1077, Bank of England working papers from Bank of England

Abstract: Using administrative data, we document that workers acquire more human capital at more productive firms. Recessions distort workers-firm sorting, flatten the job ladder and impact human capital accumulation, as workers match on average to worse firms. To quantify the aggregate relevance of these effects, we build a directed search model with aggregate risk and worker-firm heterogeneity, in which human capital accumulation depends on firm quality. We estimate the model and show that recessions have persistent negative effects on the productivity of worker-firm matches, with distortions in sorting and human capital accumulation accounting for approximately 30% of cumulative output losses.

Keywords: Human capital accumulation; hysteresis; sorting; scarring (search for similar items in EconPapers)
JEL-codes: E24 E32 J24 J63 (search for similar items in EconPapers)
Pages: 81 pages
Date: 2024-08-05
New Economics Papers: this item is included in nep-bec, nep-dge and nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:1077

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