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Specific Human Capital and Wait Unemployment

Benedikt Herz

MPRA Paper from University Library of Munich, Germany

Abstract: A displaced worker might rationally prefer to wait through a long spell of unemployment instead of seeking employment at a lower wage in a job he is not trained for. I evaluate this trade-off using micro-data on displaced workers. To achieve identification, I exploit that the more a worker invested in occupation-specific human capital the more costly it is for him to switch occupations and the higher is therefore his incentive to wait. I find that between 9% and 18% of total unemployment in the United States can be attributed to wait unemployment.

Keywords: wait unemployment; rest unemployment; specific human capital; worker mobility; mismatch; displaced workers (search for similar items in EconPapers)
JEL-codes: E24 J61 J62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab and nep-mac
Date: 2017-02
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