Short-term specificity and training: Key issues for economic restructuring

Changes in technology and markets result in the transformation of economic structure: When labor is quasi-fixed due to short-term specificity, changing conditions may imply either temporary unemployment or the need of retraining to enable mobility across the sectors. There is an economy-wide loss due to the unemployment or sluggish adjustment caused by the friction. This article discusses the role of training for development, providing a novel approach to assess its value. As training raises mobility, it may speed the development process by the abatement of key parameters, also with favorable distributional consequences. It is argued that these effects reveal the true value of easing mobility. The analysis highlights the relevance of improving training effectiveness and attractiveness.