The Cost of Human Capital Depreciation during Unemployment
Skill erosion during unemployment was of particular concern as unemployment duration increased in the Great Recession. I argue that it generates an externality in job creation: firms ignore how their hiring decisions affect the unemployment pool’s skill composition, and hence the expected output produced by new hires. As a consequence, job creation is too low from a social point of view. But the extent to which it is too low varies over the cycle. This is because the externality’s magnitude, which depends on the impact of job creation on the pool’s skill composition, reduces when the share of unemployed workers who already have eroded skills increases.
Year of publication: |
2014-07
|
---|---|
Authors: | Laureys, Lien |
Institutions: | Centre for Macroeconomics (CFM) |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Optimal Monetary Policy in the Presence of Human Capital Depreciation during Unemployment
Laureys, Lien, (2014)
-
Optimal monetary policy in the presence of human capital depreciation during unemployment
Laureys, Lien, (2014)
-
The cost of human capital depreciation during unemployment
Laureys, Lien, (2014)
- More ...