Endogenous Skill Cycles

Francesco Busato () and Enrico Marchetti

No 127, Working Papers in Public Economics from Department of Economics and Law, Sapienza University of Roma

Abstract: This paper explores the ability of a class of one-sector models to generate endogenous skills cycles. Skills cycles are here defined as endogenous fluctuations of the composition of equilibrium allocation of labor services. We consider a one sector economy in which there exist one type of capital stock, and a finite number of different labor services, which are assumed to be heterogeneous along the skill/productivity dimension. We apply the Hopf bifurcation theorem and provide necessary conditions on the model's parameters for having a closed orbit as the economy's stable set. We also develop a numerical example (based on the United States economy) showing how this closed orbit can appear under reasonable parameter values.

Keywords: Business fluctuations; Cycles; Skills. (search for similar items in EconPapers)
JEL-codes: E32 J24 (search for similar items in EconPapers)
Pages: 21
Date: 2009-10
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Journal Article: Endogenous skill cycles (2010)
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