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Wage inequality and skill asymmetries

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  • Peter Skott

    (University of Aarhus)

  • Paul Auerbach

Abstract

Using a simple model with two levels of skill, we assume that high-skill workers who fail to get high-skill jobs may accept low-skill positions; low-skill workers do not have the analogous option of filling high-skill positions. This asymmetry implies that an adverse, skill-neutral shock to aggregate employment may cause an increase in wage inequality, both between and within skill categories, as well as an increase in unemployment, especially among low-skill workers. Movements in productivity, unemployment and inequality may thus be linked to induced overeducation and credentialism.

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File URL: http://www.umass.edu/economics/publications/2004-03.pdf
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Bibliographic Info

Paper provided by University of Massachusetts Amherst, Department of Economics in its series UMASS Amherst Economics Working Papers with number 2004-03.

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Date of creation: 2004
Date of revision:
Handle: RePEc:ums:papers:2004-03

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Keywords: wage inequality; unemployment; skill-bias; overeducation;

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References

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Citations

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Cited by:
  1. Sandén, Klas, 2007. "Risk, Occupational Choice, and Inequality," Working Papers in Economics 263, University of Gothenburg, Department of Economics.
  2. Peter Skott, 2006. "Wage inequality and overeducation in a model with efficiency wages," Canadian Journal of Economics, Canadian Economics Association, vol. 39(1), pages 94-123, February.
  3. Frederick Guy & Peter Skottz, 2005. "Power-Biased Technological Change and the Rise in Earnings Inequality," Working Papers 06, ECINEQ, Society for the Study of Economic Inequality.
  4. Gibson, Bill, 2005. "The transition to a globalized economy: Poverty, human capital and the informal sector in a structuralist CGE model," Journal of Development Economics, Elsevier, vol. 78(1), pages 60-94, October.

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