IDEAS home Printed from
   My bibliography  Save this paper

Asymmetric Growth Effects, Skill Mismatch and Unemployment Persistence


  • Sneessens, Henri

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES); Faculté Libre des Sciences Economiques, Lille)


The paper consider two alternative explanations of the persistence of high unemployment rates in EC countries. One explanation is based on insider-outsider effects and the disenfranchisement of long-term unemployed workers ; the other explanation emphasizes the combined effects of asymmetric growth and relative wage rigidities which lead to skill mismatch. The issues is important because the two stories have quite different policy implications, although in both cases much emphasis will be given to the need for coordinated demand and supply policies. The two points of view are not easily distinguished empirically. The paper gives some evidence in favour of the skill mismatch story. A simple analytical framework is proposed to analyse the relationship between skill mismatch and aggregate equilibrium unemployment. This framework highlights the policy dilemma between income maintenance and economic efficiency. Twenty years after the first oil shock and the beginning of the current slow growth-high unemployment and the appropriate economic policy responses. The nature of the debate has progressively changed. The focus, which was initially on the consequences of demand vs supply shocks and the relative importance of the two, has now shifted on the mechanism of unemployment persistence. On the policy side, the emphasis is now on the need for more flexibility and for active (training and mobility) rather than passive (income maintenance) labour market policies. From this standpoint, the role and relative importance of structural phenomena remain a critical issue. We emphazise in this paper the asymmetric effects of growth on the demand for high-and low-skilled workers. This asymmetry may result from technological changes, output demand shifts (deindustrialization) and/or the increasing importance of newly industrial country. Asymmetric growth plus relative wage rigidities inevitably leads to structural maladjustment and may contribute to explain unemployment persistence in Europe. The fear is furthermore that, even with flexible real wages and full-employment, the American and European economy could in the future be unable to provide sufficient " middle-class jobs " (jobs that can provide a decent standard of living to low-skilled full-time workers). Hence the policy dilemma discussed in Drèze-Sneessens (1994) , income maintenance vs economic efficiency. We briefly review in section 1 the different factors that may lead to asymmetric growth (biased technological change, deindustrialisation and competition from low-wage countries). Our main objective however is not to evaluate the relative importance of each of these factors, but rather to look at the aggregate consequences of asymmetric growth and analyse to what extent such an asymmetry might be held responsible for the current situation in Europe. Section 2 briefly compares and evaluates the relative merits of two competing explanations of unemployment persistence, structural (skill) mismatch vs hysteresis via disenfranchisement of long-term unemployed workers. A simple analytical framework is proposed in section 3 to analyze relationship between skill mismatch and equilibrium unemployment ; this section also summarizes the empirical results obtained on French data over the period 1962-1989. Economic policy implications are discussed in section 4.

Suggested Citation

  • Sneessens, Henri, 1995. "Asymmetric Growth Effects, Skill Mismatch and Unemployment Persistence," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1995025, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvir:1995025

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ctl:louvir:1995025. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anne DAVISTER-LOGIST). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.