Sandwiches from 12:15, Seminar at 12:30
Over the business cycle, postgraduate degree holders experience lower wage variation than those with undergraduate degrees. Moreover, postgraduates have higher amount of specific human capital. Using an equilibrium search model with long-term contracts and imperfect monitoring of workers’ effort, this paper attributes the cyclicality of the postgraduate-undergraduate wage gap to the differences in match-specific capital. Imperfect monitoring creates a moral hazard problem that requires firms to pay efficiency wages. On the other hand, higher specific captial lower mobility thereby alleviating 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.
Presented by:
Ran Gu (Department of Economics)
Date & time:
February 20, 2019 12:30 pm - February 20, 2019 1:30 pm
Venue:
2N2.5B.24 - ISER Boardroom [Note change from usual venue]
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