Cyclical Upgrading of Labor and Employment Differences across Skill Groups
This paper examines the cyclical properties of employment rates in a search and matching model that features heterogeneous workers and jobs. Firms can create vacancies for jobs that that require either a high- or a low-skill level. High-skill workers are best suited for high-skill jobs, but are also qualified for low-skill jobs, whereas low-skill workers are only qualified for low-skill jobs. My analysis highlights the importance of a vertical type of transitory skill-mismatch, which takes the form workers accepting jobs below their skill level to escape unemployment and upgrading by on-the-job search, in explaining why typically employment is lower and more procyclical at lower skill levels. I show that this feature makes low-skill vacancy creation more strongly procyclical than high-skill vacancy creation. The model is also consistent with important features of the labor market, such as a procyclical rate of job-to-job transitions and evidence that the educational levels of new hires within occupations are higher in recessions and lower in booms.
References listed on IDEAS
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- Miana Plesca, 2010.
"A General Equilibrium Evaluation of the Employment Service,"
Journal of Human Capital,
University of Chicago Press, vol. 4(3), pages 274-329.
- Miana Plesca, 2010. "A General Equilibrium Evaluation of the Employment Service," Working Paper Series 40_10, The Rimini Centre for Economic Analysis.
- van Ours, J. C. & Ridder, G., 1995. "Job matching and job competition: Are lower educated workers at the back of job queues?," European Economic Review, Elsevier, vol. 39(9), pages 1717-1731, December.
- van Ours, J.C. & Ridder, G., 1995. "Job matching and job competition : Are lower educated workers at the back of job queues?," Other publications TiSEM 2b08ab23-16f0-4f9a-9bdd-7, Tilburg University, School of Economics and Management.
- van Ours, Jan & Ridder, Geert, 1992. "Vacancies and the Recruitment of New Employees," Journal of Labor Economics, University of Chicago Press, vol. 10(2), pages 138-155, April.
- Behrman, Jere R. & Rosenzweig, Mark R., 1999. ""Ability" biases in schooling returns and twins: a test and new estimates," Economics of Education Review, Elsevier, vol. 18(2), pages 159-167, April.
- Daniel S. Hamermesh, 1993. "Labor Demand and the Source of Adjustment Costs," NBER Working Papers 4394, National Bureau of Economic Research, Inc. Full references (including those not matched with items on IDEAS)
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