Author： Wasmer Etienne
Publisher： American Economic Association
ISSN： 0002-8282
Source： The American Economic Review, Vol.96, Iss.3, 2006-06, pp. : 811-831
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Abstract
Human capital investments are not independent of the aggregate state of labor markets: frictions and slackness of the labor market raise the returns to specific human capital investments relative to general investments. We build a macroeconomic model with two pure strategy regimes. In the pure G-regime, workers invest in general skills. This occurs when they face high turnover labor markets and in the absence of employment protection. The pure 5-regime in which workers invest in skills specific to their job appears when employment protection is high enough. Implications for a characterization of Europe-United States differences are provided in conclusion.
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