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Supply and Demand Responses to Skill-Biased Technical Change: a Matching Approach with Heterogenous Workers


  • Charlot, O.
  • Decreuse, B.


We consider the labour market implications of skill decay. State dependence in individual hazards emerges from the joint result of (optimal) hiring and search behaviours. We shed light on an original externality according to which firms' profits increase with the valuation of vacancies. Consequently, there can be multiple equilibria, those of which displaying the longest duration of employability also entail the least search efforts. Policies aimed at reducing long-term unemployment generally discourage search efforts, so that their results are ambiguous.

Suggested Citation

  • Charlot, O. & Decreuse, B., 2000. "Supply and Demand Responses to Skill-Biased Technical Change: a Matching Approach with Heterogenous Workers," G.R.E.Q.A.M. 00a14, Universite Aix-Marseille III.
  • Handle: RePEc:fth:aixmeq:00a14

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    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search


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