Can Skill-Biased Technological Change Compress Unemployment Rate Differentials Across Education Groups?
Our aim is to explain why the pattern of relative unemployment rates by education groups was non monotonic in most of the OECD countries. In a two-sector matching model, a simple unexpected productivity shock biased against unskilled labor can replicate the observed dynamics. Effects of skill-biased shocks can be related to inequality in the distribution of wealth.
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