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Low-Skilled Unemployment, Capital-Skill Complementarity and Embodied Technical Progress

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  • Eva, MORENO-GALBIS

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

  • Henri R., SNEESSENS

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) (Belgium) and Université Catholique de Lille (France))

Abstract

We construct an intertemporal general equilibrium model with two types of jobs and two types of workers. We allow for job competition between high- and low-skilled segment of the labour market and for on-the-job search. Matching processes are represented by matching functions à la Pissarides. Workers search intensities are endogenous. Biased technological change is introduced via embodied technical progress and a capital-skill complementarity. The model is calibrated and simulated to evaluate the impact of various types of shocks. The model reproduces quite well the unemployment rate changes and the relative wage stability observed over the last two decades. It suggests strong interactions between biased technological change, discouragement effects and job competition.

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Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2004025.

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Date of creation: 01 Sep 2004
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Handle: RePEc:ctl:louvir:2004025

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Keywords: Skill mismatch; equilibrium unemployment; ladder effect; macro dynamics;

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