Unskilled Workers in an Economy with Skill-Biased Technology
This paper contributes to the search theory of unemployment by endogenously deriving matching functions and surplus sharing rule for skilled and unskilled workers from a wage-posting game. In contrast to previous wage posting models, here both sides of the market are heterogeneous and the resulted matching function can exhibit non-constant returns to scale. The model provides useful explanations for the observed dynamic patterns of within-skill and between-skill wage differentials in the 1970s and 1980s.
|Date of creation:||Apr 1999|
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98-14, Massachusetts Institute of Technology (MIT), Department of Economics.
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