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Whodunnit? Changes in the relative demand for unskilled and skilled labor

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  • Schimmelpfennig, Axel

Abstract

The secular shift in labor demand from unskilled to skilled labor is explained within a model that is solved numerically. There are three branches producing a basic good, a differentiated luxury good, and an intermediate service. Production is more skill-intensive in the luxury good and the service branch. Consumption expenditure shifts towards the luxury good with rising income. In this setting, both unskilled-specific and neutral technical change lead to a rise in the relative wage of the skilled. Increasing unemployment results only for a restrictive assumption about labor market rigidities.

Suggested Citation

  • Schimmelpfennig, Axel, 1999. "Whodunnit? Changes in the relative demand for unskilled and skilled labor," Kiel Working Papers 914, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:914
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    More about this item

    Keywords

    Skill-biased technical change; wages; unemployment;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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