Specific Human Capital and Wait Unemployment

45 Pages Posted: 17 Nov 2016 Last revised: 13 Feb 2017

See all articles by Benedikt Herz

Benedikt Herz

European Union - European Commission; European Union - European Commission

Date Written: February 12, 2017

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

JEL Classification: E24, J61, J62

Suggested Citation

Herz, Benedikt and Herz, Benedikt, Specific Human Capital and Wait Unemployment (February 12, 2017). Available at SSRN: https://ssrn.com/abstract=2870346 or http://dx.doi.org/10.2139/ssrn.2870346

Benedikt Herz (Contact Author)

European Union - European Commission ( email )

Rue de la Loi 200
Brussels, B-1049
Belgium

European Union - European Commission ( email )

Rue de la Loi 200
Brussels, B-1049
Belgium

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