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,"
Working Paper Series
40_10, The Rimini Centre for Economic Analysis.
- 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.
- 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, 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, 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.
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