STEG Working Paper Series Research Theme 1: Firms, Frictions and Spillovers, and Industrial Policy, Research Theme 4: Trade and Spatial Frictions

Does Turnover Inhibit Specialization? Evidence from a Skill Survey in Peru

WP087 AtencioLeeMacaluso Does Turnover Inhibit Specialization.pdf

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Lima

We design, pilot, and held a new survey of occupational skills in Peru, to investigate human capital differences between poor and rich countries. Though the average skill level is comparable, Peruvian jobs have markedly more uniform skill profiles than jobs in the US. However, matching frictions are no more severe than in the US, and recruiting technology is largely equivalent as well. A model with complementarities in production offers a plausible explanation. Uncertainty about labour availability, more pronounced in poor countries' turbulent labour markets, destabilizes production. This generates an endogenous labour demand preference for unspecialized workers.

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