Skill Flows: A Theory of Human Capital and Unemployment

Ross Doppelt

Review of Economic Dynamics, 2019, vol. 31, 84-122

Abstract: I present a theoretical macroeconomic model that investigates the link between long-run growth and labor-market dynamics. Workers accumulate human capital on the job, while suffering human capital depreciation during unemployment. On the aggregate level, high unemployment hinders skill formation, creating a drag on growth. The model features endogenous growth, stochastic regime shifts, and a time-varying distribution of wages. Nevertheless, much of the model's value comes from the fact that it admits a sharp analytical characterization of the forces at work. I solve for a competitive equilibrium and derive conditions under which it will be efficient. (Copyright: Elsevier)

Keywords: Search theory; Endogenous growth; Unemployment; Human capital (search for similar items in EconPapers)
JEL-codes: E24 J24 J64 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (10)

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DOI: 10.1016/j.red.2018.12.004

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