Specific capital, firm insurance, and the dynamics of the postgraduate wage premium

Document type
Working Paper
Gu, Ran
Institute for Fiscal Studies
Date of publication
22 October 2019
IFS Working Paper; WP19/26
Employment, Poverty Alleviation Welfare Benefits and Financial Inclusion
Social welfare
Material type

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Postgraduate degree holders experience lower cyclical wage variation than those with undergraduate degrees. Moreover, postgraduates have more specific human capital than undergraduates. Using an equilibrium search model with long-term contracts and imperfect monitoring of worker effort, this paper attributes the cyclicality of the postgraduate-undergraduate wage gap to the differences in specific capital.

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