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The economics of ‘new blood’ |
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| Authors: | Derek Laing Ping Wang |
| Affiliation: | a Department of Economics, Penn State University, University Park, PA 16801, USA b Louisiana State University, LA, USA c Department of Economics, University of Ioannina, Ioannina 45110, Greece d Department of Economics, Vanderbilt University, Nashville, TN 37235, USA e National Bureau of Economic Research (NBER), Cambridge, MA, USA |
| Abstract: | We construct a dynamic general-equilibrium model of search and matching where public knowledge grows through time and workers accumulate a fraction of this knowledge through education/retraining. Due to search delays, the unemployment pool is populated by vintages of workers of differing productivities. Through intergenerational rivalry, the human capital of older generations is rendered obsolete relative to that of the new blood. Higher knowledge growth exacerbates intergenerational competition, thereby lowering education and growth while raising unemployment and inequality. These findings help explain wage compression/expansion and the hump-shaped wage-tenure profile across cohorts. |
| Keywords: | C7 D8 J6 O4 |
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