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Low-Skilled Unemployment, Biased Technological Shocks and Job Competition

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Author Info
Pierrard, Olivier (IRES, Catholic University of Louvain)
Sneessens, Henri R. () (IRES, Catholic University of Louvain, Catholic University of Lille and IZA Bonn)

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Abstract

The unemployment rise in EU countries has been particularly strong for low-skilled workers. This observation has often been explained in terms of biased technical change and relative wage rigidities. More attention has been paid recently to an alternative mechanism, the crowding-out of low-skilled workers by over-qualified workers. The objective of this paper is both methodological and empirical. We construct a dynamic general equilibrium model with two types of jobs and two types of workers and with search unemployment. The model is calibrated and simulated to examine the interactions between the “skill bias” and “crowdingout” mechanisms. When such interactions are accounted for, the model reproduces quite well the observed unemployment changes.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 784.

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Length: 32 pages
Date of creation: May 2003
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Handle: RePEc:iza:izadps:dp784

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Related research
Keywords: skill bias equilibrium search unemployment ladder effect crowding out over-education

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Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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References listed on IDEAS
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.:
  1. A. Gautier, Pieter & J. van den Berg, Gerard & C. van Ours, Jan & Ridder, Geert, 2002. "Worker turnover at the firm level and crowding out of lower educated workers," European Economic Review, Elsevier, vol. 46(3), pages 523-538, March. [Downloadable!] (restricted)
    Other versions:
  2. Fabrice Collard & Raquel Fonseca & Rafael Munoz, 2002. "Spanish Unemployment Persistence and the Ladder Effect," CEP Discussion Papers 0538, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  3. Bat COCKX & Muriel DEJEMEPPE, 2002. "Do the Higher Educated Unemployed Crowd out the Lower Educated Ones in a Competition for Jobs ?," Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Discussion Paper 2002020, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
    Other versions:
  4. 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. [Downloadable!] (restricted)
  5. Daron Acemoglu, 1999. "Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence," American Economic Review, American Economic Association, vol. 89(5), pages 1259-1278, December. [Downloadable!] (restricted)
    Other versions:
  6. Dolado, Juan J. & Jansen, Marcel & Jimeno, Juan F., 2002. "A Matching Model of Crowding-Out and On-the-Job Search (with an Application to Spain)," IZA Discussion Papers 612, Institute for the Study of Labor (IZA). [Downloadable!]
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  7. Marimon, Ramon & Zilibotti, Fabrizio, 1999. "Unemployment vs. Mismatch of Talents: Reconsidering Unemployment Benefits," Economic Journal, Royal Economic Society, vol. 109(455), pages 266-91, April. [Downloadable!] (restricted)
    Other versions:
  8. 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. [Downloadable!] (restricted)
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  9. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1998. "Computing Inequality: Have Computers Changed The Labor Market?," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1169-1213, November. [Downloadable!] (restricted)
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  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. [Downloadable!]
  11. Van der Linden, Bruno & Dor, Eric, 2001. "Labor Market Policies and Equilibrium Employment : Theory and Application for Belgium," Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Discussion Paper 2001005, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  12. Manacorda, Marco & Petrongolo, Barbara, 1999. "Skill Mismatch and Unemployment in OECD Countries," Economica, London School of Economics and Political Science, vol. 66(262), pages 181-207, May. [Downloadable!] (restricted)
  13. 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. [Downloadable!] (restricted)
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  14. Merz, Monika, 1995. "Search in the labor market and the real business cycle," Journal of Monetary Economics, Elsevier, vol. 36(2), pages 269-300, November. [Downloadable!] (restricted)
  15. Eli Berman & John Bound & Stephen Machin, 1998. "Implications Of Skill-Biased Technological Change: International Evidence," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1245-1279, November. [Downloadable!] (restricted)
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  16. Paul Beaudry & David Green, 1998. "What is Driving US and Canadian Wages: Exogenous Technical Change or Endogenous Choice of Technique?," NBER Working Papers 6853, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  17. 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. [Downloadable!] (restricted)
  18. Andolfatto, David, 1996. "Business Cycles and Labor-Market Search," American Economic Review, American Economic Association, vol. 86(1), pages 112-32, March. [Downloadable!] (restricted)
  19. Daron Acemoglu, 1998. "Why Do New Technologies Complement Skills? Directed Technical Change And Wage Inequality," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1055-1089, November. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, 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.)

  1. Pascal Belan & Martine Carré & Stéphane Gregoir, 2007. "Subsidizing low-skilled jobs in a dual labor market," THEMA Working Papers 2007-17, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise. [Downloadable!]
  2. Joseph, Gilles & Pierrard, Olivier & Sneessens, Henri R., 2003. "Job Turnover, Unemployment and Labor Market Institutions," IZA Discussion Papers 835, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. Jens Rubart & Willi Semmler, 2007. "East German Unemployment from a Macroeconomic Perspective," Darmstadt Discussion Papers in Economics 187, Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology). [Downloadable!]
  4. Eva, MORENO-GALBIS & Henri R., SNEESSENS, 2004. "Low-Skilled Unemployment, Capital-Skill Complementarity and Embodied Technical Progress," Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Discussion Paper 2004025, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  5. Olivier Pierrard, 2007. "Commuters, residents and job competition in Luxembourg," BCL working papers cahier_etude_26, Central Bank of Luxembourg. [Downloadable!]
  6. Eva, MORENO-GALBIS, 2004. "Unemployment and Endogenous Growth with Capital-Skill Complementarity," Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Discussion Paper 2004001, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
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