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Occupational specificity of human capital motivates an important role of occupational reallocation for the economy's response to shocks and for the dynamics of inequality. We introduce occupational mobility, through a random choice model with dynamic value function optimization, into a...
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aggregate shocks through their impact on asset prices and capital allocation. Compared to previous studies, this result is more … stochastically, creating a mismatch between wealth and skills. Negative shocks to aggregate productivity cause the capital allocation …
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