SNIC SUPR
The contribution of human capital dynamics and job mismatch to the slow recovery from the Great Recession
Dnr:

SNIC 2019/3-282

Type:

SNIC Medium Compute

Principal Investigator:

Karl Walentin

Affiliation:

Sveriges riksbank, Stockholms universitet

Start Date:

2019-06-01

End Date:

2020-06-01

Primary Classification:

50201: Economics

Allocation

Abstract

In this paper we ask to what degree i) human capital dynamics induced by skill loss during unemployment and ii) decrease in match quality contributed to the slow recovery from the Great Recession, in particular the low post-2009 growth in GDP, employment, labor productivity and real wages. Match quality has decreased because of the sullying effect of the recession that follows from reduced hiring activity and the resulting collapse of the job ladder. We find that the increase in unemployment during the initial phase of the Great Recession had long-lasting effects through the skill loss it induced, mainly in terms of increased unemployment and reduced GDP.