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A Theory of Factor Mobility
Gene M. Grossman and Carl Shapiro
Journal of Political Economy
Vol. 90, No. 5 (Oct., 1982), pp. 1054-1069
Published by: The University of Chicago Press
Stable URL: http://www.jstor.org/stable/1837133
Page Count: 16
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In this paper we study the determinants of intersectoral factor mobility. Mobility is the outgrowth of a prior investment decision. In particular, we focus on the human capital (i.e., training) decisions of workers. Uncertainty isa critical feature in such training decisions. The acquisition of general (vs. specific) skills allows a worker to select the more favorable sector after uncertainty is resolved. Thus general training has option value, which is enhanced by increases in risk. General training is a form of self-insurance. We study the impact of conventional insurance opportunities on training decisions. We find that the availabilty of income insurance does not necessarily imply less mobile workers.
Journal of Political Economy © 1982 The University of Chicago Press