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Skill Asymmetries, Increasing Wage Inequality and Unemployment

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Author Info
Paul Auerbach
Peter Skott () (Department of Economics, University of Aarhus, Denmark)

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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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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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Handle: RePEc:aah:aarhec:2000-18

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

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Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
E25 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Peter Skott & Paul Auerbach, 2004. "Wage inequality and skill asymmetries," Working Papers 2004-03, University of Massachusetts Amherst, Department of Economics. [Downloadable!]
  2. Peter Skott, 2004. "Fairness as a source of hysteresis in employment and relative wages," Working Papers 2004-04, University of Massachusetts Amherst, Department of Economics. [Downloadable!]
    Other versions:
  3. Muysken,Joan & Hoppe,Mombert & Rieder,Hannah, 2002. "The Impact of education and mismatch on wages: Germany, 1984-2000," Research Memoranda 041, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology. [Downloadable!]
  4. Muysken,Joan & Weissbrich,Andrea & Restorff,Claus-Henning,von, 2002. "The impact of education and mismatch on wages: the USA, 1986-1996," Research Memoranda 017, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology. [Downloadable!]
  5. Effrosyni Diamantoudi, . "Equilibrium Binding Agreements under Diverse Bahavioral Assumptions," Economics Working Papers 2001-2, School of Economics and Management, University of Aarhus. [Downloadable!]
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