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Cyclical Upgrading of Labor and Employment Differences across Skill Groups

Author

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  • Chassamboulli Andri

    () (University of Cyprus)

Abstract

This paper examines the cyclical properties of employment rates in a search and matching model that features heterogeneous workers and jobs. I capture heterogeneity by postulating two skill levels: high and low. All low-skill workers can produce in only low-skill jobs, whereas some high-skill workers can produce in both high-and low-skill jobs. My analysis highlights the importance of a vertical type of transitory skill mismatch, in which workers accept jobs below their skill level to escape unemployment and upgrade by on-the-job search, in explaining why employment is typically lower and more procyclical at lower skill levels. The model is also consistent with other important features of the labor market, such as a procyclical rate of job-to-job transitions and evidence on cyclical changes in the composition of job quality. In recessions outflows from unemployment shift the distribution of high-skill workers toward low-skill jobs, while expansions allow them to upgrade to high-skill jobs through job-to-job transitions.

Suggested Citation

  • Chassamboulli Andri, 2011. "Cyclical Upgrading of Labor and Employment Differences across Skill Groups," The B.E. Journal of Macroeconomics, De Gruyter, vol. 11(1), pages 1-42, May.
  • Handle: RePEc:bpj:bejmac:v:11:y:2011:i:1:n:14
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    References listed on IDEAS

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    1. Miana Plesca, 2010. "A General Equilibrium Evaluation of the Employment Service," Journal of Human Capital, University of Chicago Press, vol. 4(3), pages 274-329.
    2. van Ours, J. C. & Ridder, G., 1995. "Job matching and job competition: Are lower educated workers at the back of job queues?," European Economic Review, Elsevier, vol. 39(9), pages 1717-1731, December.
    3. van Ours, Jan & Ridder, Geert, 1992. "Vacancies and the Recruitment of New Employees," Journal of Labor Economics, University of Chicago Press, vol. 10(2), pages 138-155, April.
    4. Behrman, Jere R. & Rosenzweig, Mark R., 1999. ""Ability" biases in schooling returns and twins: a test and new estimates," Economics of Education Review, Elsevier, vol. 18(2), pages 159-167, April.
    5. Daniel S. Hamermesh, 1993. "Labor Demand and the Source of Adjustment Costs," NBER Working Papers 4394, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Summerfield, Fraser, 2014. "Labor Market Conditions, Skill Requirements and Education Mismatch," CLSSRN working papers clsrn_admin-2014-19, Vancouver School of Economics, revised 28 Apr 2014.
    2. repec:bla:ecinqu:v:55:y:2017:i:3:p:1370-1387 is not listed on IDEAS
    3. repec:bla:ecinqu:v:55:y:2017:i:3:p:1231-1264 is not listed on IDEAS
    4. Cuadras-Morató Xavier & Mateos-Planas Xavier, 2013. "Overeducation and skill-biased technical change," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 1-18, September.
    5. Xiangbo Liu & Theodore Palivos & Xiaomeng Zhang, 2017. "Immigration, Skill Heterogeneity, And Qualification Mismatch," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1231-1264, July.
    6. Brendan Epstein, 2012. "Heterogeneous workers, optimal job seeking, and aggregate labor market dynamics," International Finance Discussion Papers 1053, Board of Governors of the Federal Reserve System (U.S.).

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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