Events at CERGE-EI

Luca Mazzone, Ph.D.

International Monetary Fund

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Authors: Luca Mazzone, Edoardo Maria Acabbi, Andrea Alati

Abstract: Using administrative data, we document that workers acquire more human capital at more productive firms. Recessions distort workers-firm sorting, flatten the job ladder and impact human capital accumulation, as workers match on average to worse firms. To quantify the aggregate relevance of these effects, we build a directed search model with aggregate risk and worker-firm heterogeneity, in which human capital accumulation depends on firm quality. We estimate the model and show that recessions have persistent negative effects on the productivity of worker-firm matches, with distortions in sorting and human capital accumulation accounting for approximately 30% of cumulative output losses.

JEL Classification: J24, E32, E24, J63
Keywords: Human Capital Accumulation, Hysteresis, Sorting, Scarring

Full Text: Human Capital Ladders, Cyclical Sorting, and Hysteresis