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Research seminar

Why didn't the college premium rise everywhere?

Employment protection and on-the-job investment in skills

Add to calendar 2023-02-17 14:00 2023-02-17 16:00 Europe/Rome Why didn't the college premium rise everywhere? Sala Triaria Villa Schifanoia YYYY-MM-DD


17 February 2023

14:00 - 16:00 CET


Sala Triaria

Villa Schifanoia

During this EUI Inequality and Diversity Research Seminar, Professor Matthias Doepke (Northwestern University) will present his paper, co-authored with Ruben Gaetani, on the differences in employment protection in the United States and Germany and their long-lasting implications.
Why has the college wage premium risen rapidly in the United States since the 1980s, but not in European economies such as Germany? We argue that differences in employment protection can account for much of the gap. We develop a model in which firms and workers make relationship-specific investments in skill accumulation. The incentive to invest is stronger when employment protection creates an expectation of long-lasting matches. We argue that changes in the economic environment have reduced relationship-specific investment for less-educated workers in the United States, but not for better-protected workers in Germany.
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