Sectoral shocks, human capital, and displaced workers

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Abstract

This paper extends the Lucas-Prescott island economy to allow for finite lived agents and sector specific human capital. Unlike the Lucas-Prescott model in which workers who leave declining sectors find employment in expanding sectors, this models predicts that workers who leave declining sectors may simply become non-employed, whereas increased employment in expanding sectors is accomplished by increasing the rate at which new entrants enter the sector.

Original languageEnglish (US)
Pages (from-to)89-105
Number of pages17
JournalReview of Economic Dynamics
Volume8
Issue number1
DOIs
StatePublished - Jan 2005
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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