Are Specific Skills An Obstacle To Labor Market Adjustment?

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Executive Summary

This paper shows that specialized education reduces workers' mobility and hence their ability to cope with economic changes. The authors illustrate this point using labor force data from two countries having experienced important macroeconomic turbulence; a large economy with rigid labor markets, Poland, and a small open economy with increased flexibility, Estonia. They find that holding a vocational degree is associated with much longer unemployment duration spells and higher likelihood of leaving activity for older workers.

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