Occupation-Specific Human Capital and Local Labor Markets

Most skills acquired through on-the-job training may be specific to an occupation and therefore transferable to some but not all firms. However, economists have typically focused on skills that are either specific to a given firm or skills that are completely general. This paper explores the relationship between the size of the local market for an occupation-specific skill and job-training outcomes. The Stevens (1994) model of training predicts that as market size increases, job turnover among trained workers increases and training becomes more general. I test these predictions using data on bluecollar workers and variation in market size across U.S. metropolitan areas. The empirical results support the theoretical predictions. For both turnover and training type, the effects of market size are most relevant at low levels of market size. JEL Categories: J24, J63, J61.