Wage Divergence and Asymmetries in Unemployment in a Model with Biased Technical Change
AbstractIn this article we present a model with two levels of skills and two classes of goods, one produced with a technology requiring high skills, the other produced with a technology that can be operated by both low and high skilled workers. In this model skill biased technical change causes a drop in the demand for low skilled workers. The model, however, generates two distinct labour market regimes. In one regime we show skill biased technical change causes wage divergence between skilled and unskilled workers. In the alternative regime a reallocation of labour prevents such wage responses. Introducing labour market institutions through a bargaining process endogenises labour supply. This leads to three possible labour market regimes and shows that skill biased technical change always causes wage divergence but wage responses are moderated by higher unemployment of low skilled workers.
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Bibliographic InfoPaper provided by Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology in its series Research Memoranda with number 019.
Date of creation: 1999
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labour economics ;
Other versions of this item:
- Muysken,J. & Sanders,M. & Zon,A.,Van, 1998. "Wage Divergence and Asymmetries in Unemployment in a Model with Biased Technical Change," Research Memoranda 023, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology.
- Muysken, J. & Zon, A van, 2001. "Wage divergence and asymmetries in unemployment in a Mmodel with biased technical change," Open Access publications from Maastricht University urn:nbn:nl:ui:27-17170, Maastricht University.
- NEP-ALL-1999-05-17 (All new papers)
- NEP-DEV-1999-05-17 (Development)
- NEP-TID-1999-05-17 (Technology & Industrial Dynamics)
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