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Overeducation, Job Competition and Unemployment

  • Muysken Joan
  • Weel Bas ter


The changing wage and employment structure in some OECD countries has beenattributed to increased levels of education and technical change in favour of skilledworkers. However, in the Netherlands and some other OECD countries the wages ofskilled workers did not rise, whereas investment in skills rose dramatically. This paperoffers a theory which is able to explain the dramatic increase in the level of education andskills without rising wages since the early 1980s. In this respect, we integrate the supplyside framework (human capital investments) and the demand side (containingendogenous skill upgrading as a result of job competition and screening) in a generalequilibrium model. In this way we provide a theory for the empirical observation ofrising unemployment levels among unskilled workers and rising employment levels ofskilled workers with relatively stable wages.

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Paper provided by Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT) in its series Research Memorandum with number 030.

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Date of creation: 1999
Date of revision:
Handle: RePEc:unm:umamer:1999030
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