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Skill Asymmetries, Increasing Wage Inequality and Unemployment

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  • Paul Auerbach
  • Peter Skott

    ()
    (Department of Economics, University of Aarhus, Denmark)

Abstract

Using a simple model with two levels of skill, we assume that high-skill workers who fail to get high-skill jobs may accept low-skill positions; low-skill workers do not have the analogous option of filling high-skill positions. This asymmetry implies that a slowdown in Hicks-neutral technical change (or other adverse, skill-neutral shocks) may cause an increase in wage inequality, both between and within skill categories, as well as an increase in unemployment, especially among low-skill workers. Movements in productivity, unemployment and inequality may thus be linked to induced overeducation and credentialism.

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Bibliographic Info

Paper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2000-18.

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Length: 34
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Handle: RePEc:aah:aarhec:2000-18

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Web page: http://www.econ.au.dk/afn/

Related research

Keywords: Wage inequality; unemployment; skill-bias; Hicks-neutral technical change; overeducation; credentialism;

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References

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Citations

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Cited by:
  1. Peter Skott & Paul Auerbach, 2004. "Wage inequality and skill asymmetries," UMASS Amherst Economics Working Papers 2004-03, University of Massachusetts Amherst, Department of Economics.
  2. Skott, Peter, . "Fairness as a source of hysteresis in employment and relative wages," Economics Working Papers 2003-6, School of Economics and Management, University of Aarhus.
  3. Effrosyni Diamantoudi, . "Equilibrium Binding Agreements under Diverse Bahavioral Assumptions," Economics Working Papers 2001-2, School of Economics and Management, University of Aarhus.
  4. Alain Alcouffe & Jean-Michel Plassard, 2013. "Abondance d'éducation peut -elle nuire ? Une histoire des théories de économiques de la sur-éducation," Working Papers halshs-00827251, HAL.

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