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Human capital portfolios

Silos, P and Smith, E (2015) 'Human capital portfolios.' Review of Economic Dynamics, 18 (3). 635 - 652. ISSN 1094-2025

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Abstract

This paper assesses the trade-off between acquiring specialized skills targeted for a particular occupation and acquiring a package of skills that diversifies risk across occupations. Individual-level data on college credits across subjects and labor market dynamics reveal that diversification generates higher income for individuals who switch occupations whereas specialization benefits those who stick with one type of job. A human capital portfolio choice problem featuring skills, abilities, and uncertain labor outcomes replicates this general pattern and generates a sizable amount of inequality. Policy experiments illustrate that mandatory specialization generates lower average income growth, lower turnover and marginally lower inequality.

Item Type: Article
Uncontrolled Keywords: Human capital; Occupational choice; Income inequality
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 07 Jul 2015 09:14
Last Modified: 22 Oct 2020 15:15
URI: http://repository.essex.ac.uk/id/eprint/14249

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