Firm - Specific Human Capital, Experience and the Differential Incidence of Unemployment

Abstract

This paper examines the hypothesis that the structure of unemployment is inversely related to the structure of human capital stock and hence, by implication, is correlated with the structure of earnings. An empirical analysis involving census data strongly supports the existence of a casual relationship between the differential incidence of unemployment, formal education and general workforce experience. Comparison of the resulting parameter estimates with those reported in studies of the personal distribution of income also strongly endorse the hypothesis of correlation between the wage structure and the structure of unemployment. These results represent a contradiction of the specific human capital hypothesis.