Training and Business Cycles

Abstract

This paper examines the behavior of skill acquisition through training at business cycles frequencies. A time series of training is first constructed using individual data from the NLSY79 database. We document the cyclical properties of the series, and find that training is weakly countercyclical, leads the cycle, and has a standard deviation of more than ten times that of output. We show that a model where employment, but not hours per week, is costly to adjust, is able to account for most of the documented regularities.

Keywords: training, business cycles