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Jobless Recoveries and Skill-Biased Sectoral Shift

Seoul Journal of Economics 29 (No. 3 2016): 305-330

26 Pages Posted: 30 Aug 2016  

Zhen Cui

California State University, Los Angeles

Date Written: August 30, 2016

Abstract

This study first defines skill-biased sectoral shift using two stylized facts. Specifically, the shift features the service sector having more college workers and becoming more productive than the goods sector. Subsequently, this study develops a two-sector model in which the shift is incorporated via a sector-specific labor adjustment cost and a reallocation shock. Although the model generates a jobless recovery, its implications on unemployment duration are not entirely consistent with the data. Therefore, this study considers its sectoral theory as promising, but does not claim that such theory fully explains jobless recoveries, especially when the existence of many alternative explanations is considered.

Keywords: Jobless recovery, Sectoral shift, Reallocation shock, Labor adjustment cost

JEL Classification: E24, E32

Suggested Citation

Cui, Zhen, Jobless Recoveries and Skill-Biased Sectoral Shift (August 30, 2016). Seoul Journal of Economics 29 (No. 3 2016): 305-330. Available at SSRN: https://ssrn.com/abstract=2831898

Zhen Cui (Contact Author)

California State University, Los Angeles ( email )

5151 State University Dr
Los Angeles, CA 90032
United States

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