A Matching Model of Crowding-Out and On-the-Job Search (with an application to Spain)
This paper considers a matching model of heterogenous workers and jobs which includes on-the-job search. High-educated workers transitorily accept unskilled jobs and continue to search for skilled jobs. We study the implications of this model for the unemployment rates of high and low-educated workers, for the share of mismatched workers and wage inequality both within and between skill groups. The model is used to shed light on the Spanish experience following a large educational upgrading since the mid-eighties.
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