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Title:Uncertainty and the specificity of human capital PDF Logo
Authors:Gervais, Martin
Livshits, Igor
Meh, Césaire
Issue Date:2007
Series/Report no.:Bank of Canada Working Paper 2007,57
Abstract:This paper studies the choice between general and specific human capital. A trade-off arises because general human capital, while less productive, can easily be reallocated across firms. Accordingly, the fraction of individuals with specific human capital depends on the amount of uncertainty in the economy. Our model implies that while economies with more specific human capital tend to be more productive, they also tend to be more vulnerable to turbulence. As such, our theory sheds some light on the experience of Japan, where human capital is notoriously specific: while Japan benefited from this predominately specific labor force in tranquil times, this specificity may also have been at the heart of its prolonged stagnation.
Subjects:Economic Models
JEL:J24
J41
J62
D92
Document Type:Working Paper
Appears in Collections:Bank of Canada Working Papers

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