Gu, Ran (2019) Specific capital, firm insurance, and the dynamics of the postgraduate wage premium. Working Paper. Institute for Fiscal Studies (IFS) Working Paper. (Unpublished)
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Abstract
Postgraduate degree holders experience lower cyclical wage variation than those with undergraduate degrees. Moreover, postgraduates have more specific human capital than undergraduates. Using an equilibrium search model with long-term contracts and imperfect monitoring of worker effort, this paper attributes the cyclicality of the postgraduate-undergraduate wage gap to the differences in specific capital. Imperfect monitoring creates a moral hazard problem that requires firms to pay efficiency wages. More specific capital leads to lower mobility, thereby alleviating the moral hazard and improving risk-sharing. Estimates reveal that specific capital explains the differences both in labour turnover and in wage cyclicality across education groups.
Item Type: | Monograph (Working Paper) |
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Divisions: | Faculty of Social Sciences > Economics, Department of |
Depositing User: | Elements |
Date Deposited: | 22 Nov 2020 19:37 |
Last Modified: | 22 Nov 2020 19:37 |
URI: | http://repository.essex.ac.uk/id/eprint/29139 |
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