How transferable are workers’ skills?: A Structural Estimation of Italian Data

This paper develops and estimates a simple on-the-job search model with skills accumulation. In our model, contrary to previous works, skills are not fully firm-specific nor general but partially transferable. When a worker experience a job transition from firm A to firmB a fraction τ of the skills are lost where τ depends on some distance between firm A and B. In this framework the interaction between on-the-job search and heterogeneous specificity of skills, endogenously determines both mobility decision and wage dynamics. We show that such interaction, while generating bias of standard IV techniques, allows a more robust structural estimation. JEL: I20, J01, J02, J24, J60.