Journal of Monetary Economics volume 58, issue 6-8, P601-615 2011 DOI: 10.1016/j.jmoneco.2011.10.009 View full text
Sangeeta Pratap, Erwan Quintin

Abstract: Financial crises cause significant reallocation of labor across sectors and occupations. This results in transitory losses in the quality of labor as specific human capital is destroyed and workers devote time to learning new skills, among other possible transition costs. In other words, crises are periods of high turbulence in the sense of Ljunqvist and Sargent (1998). In this paper, we provide strong evidence that these losses were substantial in the case of Mexico's 1994-95 crisis. Workers that changed occ…

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