Career Progression, Economic Downturns, and Skills

Jerome Adda, Christian Dustmann, Costas Meghir and Jean-Marc Robin

No 1889, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: This paper analyzes the career progression of skilled and unskilled workers, with a focus on how careers are affected by economic downturns and whether formal skills, acquired early on, can shield workers from the effect of recessions. Using detailed administrative data for Germany for numerous birth cohorts across different regions, we follow workers from labor market entry onwards and estimate a dynamic life-cycle model of vocational training choice, labor supply, and wage progression. Most particularly, our model allows for labor market frictions that vary by skill group and over the business cycle. We find that sources of wage growth differ: learning-by-doing is an important component for unskilled workers early on in their careers, while job mobility is important for workers who acquire skills in an apprenticeship scheme before labor market entry. Likewise, economic downturns affect skill groups through very different channels: unskilled workers lose out from a decline in productivity and human capital, whereas skilled individuals suffer mainly from a lack of mobility.

Keywords: Wage determination; Skills; Business cycles; Apprenticeship Training; Job Mobility; Human Capital (search for similar items in EconPapers)
JEL-codes: I24 J24 J31 J62 J63 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2013-02
New Economics Papers: this item is included in nep-dge, nep-hrm, nep-lab, nep-lma and nep-ltv
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Citations: View citations in EconPapers (28)

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Related works:
Working Paper: Career progression, economic downturns and skills (2013)
Working Paper: Career Progression, Economic Downturns and Skills (2013)
Working Paper: Career Progression, Economic Downturns and Skills (2013)
Working Paper: Career progression, economic downturns and skills (2013)
Working Paper: Career progression, economic downturns, and skills (2013)
Working Paper: Career Progression, Economic Downturns, and Skills (2013)
Working Paper: Career Progression, Economic Downturns, and Skills (2013)
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