What Should I Be When I Grow Up? Occupations and Unemployment over the Life Cycle
NBER Working Paper No. 20628
Why is unemployment higher for younger individuals? We address this question in a frictional model of the labor market that features learning about occupational fit. In order to learn the occupation in which they are most productive, workers sample occupations over their careers. Because young workers are more likely to be in matches that represent a poor occupational fit, they spend more time in transition between occupations. Through this mechanism, our model can replicate the observed age differences in unemployment which, as in the data, are due to differences in job separation rates.
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Document Object Identifier (DOI): 10.3386/w20628
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