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Macroeconomic Uncertainty and Capital-Skill Complementarity

Author

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  • Anna Belianska

Abstract

I examine the impact of macroeconomic uncertainty on labor market outcomes for skilled and unskilled workers and propose a new channel to improve our understanding of the underlying propagation mechanisms. I find that uncertainty shocks are recessionary with the unskilled experiencing a steeper fall in employment. To rationalize these findings, I build a New Keynesian DSGE model with skill heterogeneity and wage rigidities, which, coupled with precautionary labor supply, significantly amplify contractionary effects of uncertainty on the real economy.

Suggested Citation

  • Anna Belianska, 2023. "Macroeconomic Uncertainty and Capital-Skill Complementarity," IMF Working Papers 2023/155, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2023/155
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