On the Industry Specificity of Human Capital and Business Cycles

Vahagn Jerbashian, Sergey Slobodyan and Evangelia Vourvachaki ()

No 2016/335, UB School of Economics Working Papers from University of Barcelona School of Economics

Abstract: We define specific (general) human capital as the set of occupations whose use is spread in a limited (wide) set of industries. Using the EU Labor Force Survey database, we identify these human capital types and analyze their employment and education. This exercise yields a persistent assignment of occupations into specific and general human capital types. The share of specific human capital varies across countries and has declined over time almost everywhere.We consider a stylized two-sector model where one of the sectors uses both types of human capital and the other specializes on general human capital. We show that a mean preserving increase in the share of specific human capital reduces (increases) the contribution of shocks in non-specialized sector and increases (reduces) the contribution of shocks in specialized sector to the variance of final output, when sectoral outputs are gross complements (substitutes).

Keywords: Specific and General Human Capital Types; Propagation of Sectoral Shocks; Output Volatility. (search for similar items in EconPapers)
JEL-codes: E24 E30 I20 J23 J24 O41 (search for similar items in EconPapers)
Pages: 109 pages
Date: 2016
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