Stochastic labour market shocks, labour market programmes, and human capital formation: a theoretical and empirical analysis
Type
discussion paper
Date Issued
2007-07-09
Author(s)
Vazquez-alvarez, Rosalia
Abstract (De)
This paper develops a life-cycle model of labour supply that captures endogenous human capital
formation allowing for individual's heterogeneous responses to stochastic labour market shocks. The
shocks determines conditions in the labour market and sort individuals into three labour market regimes;
employment, unemployment with and unemployment without participation in labour market programmes.
The structural model entails time independent stochastic shocks that have transitory effects on monetary
returns while the effect on human capital formation may be permanent. The permanent effect may justify
the existence of active labour market programmes if these programmes imply non-depreciating human
capital and human capital depreciation is detected for the non-participant unemployed. Using several
years of the Swiss Labour Force Survey (SAKE, 1991 - 2004) the empirical section compares the
dynamic formation of human capital between labour market regimes. The results are consistent with the
assumptions of the structural model and suggest human capital depreciation for unemployment without
programme participation. They further show that labour programmes may act as a buffer to reduce human
capital loss while unemployed.
formation allowing for individual's heterogeneous responses to stochastic labour market shocks. The
shocks determines conditions in the labour market and sort individuals into three labour market regimes;
employment, unemployment with and unemployment without participation in labour market programmes.
The structural model entails time independent stochastic shocks that have transitory effects on monetary
returns while the effect on human capital formation may be permanent. The permanent effect may justify
the existence of active labour market programmes if these programmes imply non-depreciating human
capital and human capital depreciation is detected for the non-participant unemployed. Using several
years of the Swiss Labour Force Survey (SAKE, 1991 - 2004) the empirical section compares the
dynamic formation of human capital between labour market regimes. The results are consistent with the
assumptions of the structural model and suggest human capital depreciation for unemployment without
programme participation. They further show that labour programmes may act as a buffer to reduce human
capital loss while unemployed.
Language
German
Keywords
Human capital formation
life-cycle labour supply models
active labour market policies
search activities
productivity shocks
unemployment.
HSG Classification
contribution to scientific community
Refereed
No
Subject(s)
Eprints ID
38168
File(s)![Thumbnail Image]()
![Thumbnail Image]()
Loading...
open.access
Name
LeVA_20070707_paper.pdf
Size
224.3 KB
Format
Adobe PDF
Checksum (MD5)
7066f2a538b4b6f92f73abafc0776833
Loading...
open.access
Name
LeVA_20070707_appendix.pdf
Size
91.74 KB
Format
Adobe PDF
Checksum (MD5)
76ffc3975b5ca9cf06834b907733e51e