Events

Frictions, institutions and policies that reduce worker flows affect not only the distribution of workers over firms at a point in time, but also the experiences workers accumulate over their careers. I quantify how barriers to worker mobility affect skill accumulation and aggregate output in a life-cycle equilibrium search model with endogenous firm entry and job creation, in which firms differ in productivity and learning environments. I calibrate the model to worker-level panels from 15 advanced economies with comparable data on vocational onthe-job training. Barriers to entry and hiring prolong nonemployment, delay access to good learning environments, and reduce workers’ willingness to accept learning jobs by limiting future opportunities to use acquired skills at more productive employers. Replacing each country’s labor taxes and startup costs with their U.S. counterparts raises output per worker by 5.5 log points on average, of which 4.7 log points reflect greater skill accumulation. A separately calibrated model in which skills do not respond to policy captures less than half of the gain.