The role of specific and general human capital after displacement

Ben Kriechel, Maastricht University
Gerard Antonius Pfann, Maastricht University

Abstract

Displaced workers experience significant and long-lasting wage losses. However, the average wage losses hide the tremendous differences among workers. So far, the differences are explained by differences in accumulated on-the-job experience, education level, age, and so on, but a large variation among similar workers remain. In this paper we investigate the effect of general and specific human capital on the unemployment duration and wage losses during the first three years following displacement. Information on the specificity of a job or function allows us to quantify the impact on the wage losses. We are able to rank positions in terms of the specificity of accumulated human capital.