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Human capital and the business cycle effects on the postgraduate wage premium

Gu, R. ORCID: 0000-0002-6414-6434 (2023). Human capital and the business cycle effects on the postgraduate wage premium. Review of Economic Dynamics, 48, pp. 345-376. doi: 10.1016/j.red.2022.07.001

Abstract

Postgraduate degree holders experience lower cyclical variation in real wages than those with undergraduate degrees. Moreover, postgraduate jobs require more specific human capital. Using an equilibrium search model with dynamic incentive contracts, this paper attributes the cyclicality of the postgraduate-undergraduate wage gap to the differences in specific capital. Greater specific capital leads to lower mobility, thereby improving risk-sharing between workers and firms. The estimates of the model reveal that specific capital can explain the differences both in labour turnover and in real wage cyclicality between education groups.

Publication Type: Article
Additional Information: © 2023. This manuscript version is made available under the CC-BY-NC-ND 4.0 license https://creativecommons.org/licenses/by-nc-nd/4.0/
Publisher Keywords: Real wage cyclicality, Education, Wage premium, Specific human capital, Wage contract, Search
Subjects: H Social Sciences > HB Economic Theory
Departments: School of Policy & Global Affairs
School of Policy & Global Affairs > Department of Economics
SWORD Depositor:
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