Working and Training: A Nonlinear Dynamic Analysis of Human Capital Development

We tend to think of workers completing their education and then entering the workforce, where they will gradually develop their skills. In fact, however, a worker's career may be characterized not only by this gradual buildup of job-related skills but also by recurrent education, i.e. the phenomenon whereby a worker alternates between earning-intensive periods and training-intensive periods along his career path. In this study, we build a dynamic optimization model of earning/training decisions of a worker in which these patterns of his career path can be explained in an integrated manner.