Unskilled Workers in an Economy with Skill-Biased Technology
AbstractThis paper contributes to the search theory of unemployment by endogenously generating matching functions for skilled and unskilled workers from a wage-posting game. The model is capable of producing a positive skill premium and a positive wage differential among homogeneous unskilled workers. The skill premium arises from a skill-biased technology; the wage differential among unskilled workers sustains because a lower wage is compensated by a higher chance of getting the job. The model provides useful explanations for the observed dynamic patterns of within-skill and between-skill wage differentials in the 1970s and 1980s and for the relative cyclical volatility of hours of work by different skill groups of workers. Ce papier contribue à la théorie ``search'' du chômage par la génération endogène de fonctions d'appariement pour des travailleurs qualifiés et non-qualifiés dans un jeu d'affichage de salaire. Le modèle est capable de produire une prime de qualification positive ainsi qu'un différentiel de salaire positif entre les travailleurs homogènes non qualifiés. La prime de qualification apparaît en raison d'une technologie biaisée par les qualifications; le différentiel de salaire parmi les travailleurs non qualifiés trouve son origine dans un salaire plus faible compensé par une plus forte probabilité d'obtenir l'emploi. Le modèle offre des explications utiles pour l'évolution observée des différentiels de salaire à l'intérieur des classes de qualifications et entre elles durant les années 1970 et 1980 ainsi que pour la variabilité relative des heures de travail des différents groupes à travers le cycle.
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Bibliographic InfoPaper provided by CREFE, Université du Québec à Montréal in its series Cahiers de recherche CREFE / CREFE Working Papers with number 73.
Length: 44 pages
Date of creation: Jul 1998
Date of revision:
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More information through EDIRC
Wage-posting; Wage differentials; Skill-biased technology;
Other versions of this item:
- Shouyong Shi, 1999. "Unskilled workers in an economy with skill-biased technology," Working Paper Series WP-99-5, Federal Reserve Bank of Chicago.
- Shouyong Shi, 1999. "Unskilled Workers in an Economy with Skill-Biased Technology," Working Papers 987, Queen's University, Department of Economics.
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
This paper has been announced in the following NEP Reports:
- NEP-ALL-1999-03-22 (All new papers)
- NEP-DGE-1999-03-22 (Dynamic General Equilibrium)
- NEP-LTV-1999-03-28 (Unemployment, Inequality & Poverty)
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.:
- Acemoglu, Daron & Shimer, Robert, 1999.
"Holdups and Efficiency with Search Frictions,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 827-49, November.
- Julien, B. & Kennes, J. & King, I., 1998.
"Bidding for Labour,"
dp98-03, Department of Economics, Simon Fraser University.
- Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
- Mortensen, Dale T, 1982. "Property Rights and Efficiency in Mating, Racing, and Related Games," American Economic Review, American Economic Association, vol. 72(5), pages 968-79, December.
- Rios-Rull, Jose-Victor, 1993. "Working in the Market, Working at Home, and the Acquisition of Skills: A General-Equilibrium Approach," American Economic Review, American Economic Association, vol. 83(4), pages 893-907, September.
- Shouyong Shi, 2000. "The Research Agenda: Search Theory beyond the Matching Function," EconomicDynamics Newsletter, Review of Economic Dynamics, vol. 1(2), April.
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