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The “Dynamic” of Job Competition during the ICT Revolution

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  • Chéron, Arnaud

    ()
    (University of Le Mans)

  • Langot, François

    ()
    (University of Le Mans)

  • Moreno-Galbis, Eva

    ()
    (University of Le Mans)

Abstract

Our paper seeks to gain insights on the effect of labor market institutions on the evolution of overeducation (job competition), unemployment inequalities and job instability during the polarization process of the labor market fostered by the diffusion of novel technologies. Based on micro data, we first present some stylized facts characterizing the occidental countries' labor markets. We then develop an endogenous job destruction framework á la Mortensen and Pissarides (1994) where each individual is endowed with a given ability level. The process of contact between the set of heterogeneous workers and firms is represented by a traditional matching function. The segmentation of the labor market between workers having the required ability to occupy cognitive jobs (where novel technologies are used) and the rest of the workers occupying simple jobs is endogenously determined. Firms offering a cognitive job support a set up cost but ICT are assumed to improve their productivity. When simulated the model manages to reproduce the U-shaped path followed by the ability requirements needed in cognitive positions as ICT got increasingly diffused. Furthermore, we also draw conclusions concerning the evolution of job stability, the size of each labor market segment and the unemployment rates.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2671.

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Length: 50 pages
Date of creation: Mar 2007
Date of revision:
Publication status: published in: Economica, 2010, 78 (309), 159-186
Handle: RePEc:iza:izadps:dp2671

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Keywords: heterogeneous agents; job turnover; overeducation; technological change;

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  1. James Albrecht & Susan Vroman, 2002. "A Matching Model with Endogenous Skill Requirements," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 283-305, February.
  2. Stephen Machin & John Van Reenen, 1998. "Technology And Changes In Skill Structure: Evidence From Seven Oecd Countries," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1215-1244, November.
  3. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2006. "The Polarization of the U.S. Labor Market," American Economic Review, American Economic Association, vol. 96(2), pages 189-194, May.
  4. Eric Maurin & David Thesmar, 2004. "Changes in the Functional Structure of Firms and the Demand for Skill," Journal of Labor Economics, University of Chicago Press, vol. 22(3), pages 639-664, July.
  5. Mortensen, Dale T & Pissarides, Christopher A, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 397-415, July.
  6. Mortensen, Dale T & Pissarides, Christopher A, 1999. "Unemployment Responses to 'Skill-Biased' Technology Shocks: The Role of Labour Market Policy," Economic Journal, Royal Economic Society, vol. 109(455), pages 242-65, April.
  7. Eli Berman & John Bound & Zvi Griliches, 1993. "Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing," NBER Working Papers 4255, National Bureau of Economic Research, Inc.
  8. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The Skill Content Of Recent Technological Change: An Empirical Exploration," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1279-1333, November.
  9. Alexandra Spitz-Oener, 2006. "Technical Change, Job Tasks, and Rising Educational Demands: Looking outside the Wage Structure," Journal of Labor Economics, University of Chicago Press, vol. 24(2), pages 235-270, April.
  10. Pieter A. Gautier, 1999. "Unemployment and Search Externalities in a Model with Heterogeneous Jobs and Heterogeneous Workers," Tinbergen Institute Discussion Papers 99-075/3, Tinbergen Institute.
  11. Dolado, Juan J. & Felgueroso, Florentino & Jimeno, Juan F., 2000. "Youth labour markets in Spain: Education, training, and crowding-out," European Economic Review, Elsevier, vol. 44(4-6), pages 943-956, May.
  12. Maarten Goos & Alan Manning, 2003. "Lousy and Lovely Jobs: the Rising Polarization of Work in Britain," CEP Discussion Papers dp0604, Centre for Economic Performance, LSE.
  13. Ingram, Beth F. & Neumann, George R., 2006. "The returns to skill," Labour Economics, Elsevier, vol. 13(1), pages 35-59, February.
  14. Hartog, Joop, 2000. "Over-education and earnings: where are we, where should we go?," Economics of Education Review, Elsevier, vol. 19(2), pages 131-147, April.
  15. Gérard Forgeot & Jérôme Gautié, 1997. "Insertion professionnelle des jeunes et processus de déclassement," Économie et Statistique, Programme National Persée, vol. 304(1), pages 53-74.
  16. Maarten Goos & Alan Manning, 2003. "Lousy and lovely jobs: the rising polarization of work in Britain," LSE Research Online Documents on Economics 20002, London School of Economics and Political Science, LSE Library.
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