Human Capital Ladders, Cyclical Sorting, and Hysteresis

78 Pages Posted: 28 Apr 2022 Last revised: 26 Apr 2024

See all articles by Edoardo Maria Acabbi

Edoardo Maria Acabbi

Universidad Carlos III de Madrid

Andrea Alati

Bank of England

Luca Mazzone

International Monetary Fund (IMF)

Date Written: March 28, 2022

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.

Keywords: Human Capital Accumulation; Hysteresis; Sorting; Scarring

JEL Classification: J24, J63, E24, E32

Suggested Citation

Acabbi, Edoardo Maria and Alati, Andrea and Mazzone, Luca, Human Capital Ladders, Cyclical Sorting, and Hysteresis (March 28, 2022). Available at SSRN: https://ssrn.com/abstract=4068858 or http://dx.doi.org/10.2139/ssrn.4068858

Edoardo Maria Acabbi

Universidad Carlos III de Madrid ( email )

CL. de Madrid 126
Madrid, Madrid 28903
Spain

HOME PAGE: http://eacabbi.github.io

Andrea Alati

Bank of England ( email )

Threadneedle Street
London EC2R 8AH
United Kingdom

Luca Mazzone (Contact Author)

International Monetary Fund (IMF) ( email )

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
264
Abstract Views
1,287
Rank
216,900
PlumX Metrics