tag:blogger.com,1999:blog-8702840202604739302.post8083754557837210051..comments2024-03-28T03:38:53.734-07:00Comments on MacroMania: Old Dogs, New TricksDavid Andolfattohttp://www.blogger.com/profile/12138572028306561024noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-8702840202604739302.post-2361646183828168612010-10-15T10:11:38.206-07:002010-10-15T10:11:38.206-07:00Maybe this is common sense but here is my take on ...Maybe this is common sense but here is my take on the matter. It makes sense if there is an optimal mix of skills per worker that varies over the business cycle. I'll conjecture that the optimal mix consists of two kinds: "day-to-day skills", and "optional skills".<br /><br />The first kind are those that are actively used in day-to-day activities. However the second kind are like options, skills that "could" be exercised later. In a sense, today's "optional skills" become tommorrow's "day-to-day skills".<br /><br />Employers often speak of continuous employee development and training and I think that is in part to allocate resources to develop "optional skills" that allow firms to take action based on market contingencies. <br /><br />Of course employers can go to market to acquire the skills as needs arise but the cost of doing so (such as the time it takes to find a match) may exceed the cost of developing a portfolio of "optional skills" in-house. The more uncertain the business environment, the more valuable those options become.<br /><br />Employees do the same thing. For example a programmer may want to gain skills in a new programming language even though their current position doesn't utilize that technology. The broader skill set makes the employee more valuable to the firm in the sense that it now has the option to utilize that new programming language. (Think of a company developing applications for Windows that is considering developing applications for Apple iPhones, which uses different technology.) There's probably some interesting dynamics around what the employer and employee would do based on how those "optional skills" were acquired and how they would react. But I digress...<br /><br />Now in the case of employees that are no longer qualified for their old jobs, employers now require "day to day skills" that former employees may not have had as "optional skills" in the previous period. This can be exacerbated when employees are let go and they no longer receive signals from their former employer of what constitutes potentially valuable "optional skills". Following this line of thought through, the longer they stay unemployed, the longer they become out of touch with the signals of which "optional skills" they should invest in as a portfolio of their overall skill sets of which their industry is currently demanding.<br /><br />Anyways I haven't thought this through enough but anyways just thought I'd throw it out there. (Sorry for the long reply.)Pani Panihttps://www.blogger.com/profile/02518606285629758795noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-73302387442965121282010-10-12T15:47:52.447-07:002010-10-12T15:47:52.447-07:00The appropriate policy response never seems to be ...The appropriate policy response never seems to be "do nothing." But, based on governmental incompetence and the knowledge problem, it's probably optimal.Prof Jhttps://www.blogger.com/profile/16539902592080231165noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-73739219858756438572010-10-12T13:09:47.899-07:002010-10-12T13:09:47.899-07:00David,
I'm not certain the answer to your que...David,<br /><br />I'm not certain the answer to your question is in here, but I just got the Richmond Fed's EQ and this paper has some interesting discussion on the topic:<br /><br />http://www.richmondfed.org/publications/research/economic_quarterly/2010/q2/pdf/kudlyak.pdfProf Jhttps://www.blogger.com/profile/16539902592080231165noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-26075567734784410142010-10-12T08:13:23.977-07:002010-10-12T08:13:23.977-07:00"Moreover, we should (I think) expect the opp..."Moreover, we should (I think) expect the opposite to hold during booms. Do we, in fact, observe firms asking for narrower skill sets during economic expansions?"<br /><br />To some extent, I think this is correct. Figure 7 of Heathcote, Perri and Violante (RED 2010) shows 2 things:<br />1) The volatility of hours over the business cycle for low earners is high relative to that of mid and high earners.<br />2) Low-earner hours are procyclical.joehttps://www.blogger.com/profile/16779379560917428758noreply@blogger.com