revised version published as "Biased Technological Shocks, Relative Wage Rigidities and Low-Skilled Unemployment”in Scottish Journal of Political Economy, 2008, 55(3), 330-352
The unemployment rise in EU countries has been particularly strong for low-skilled workers.
This observation has often been explained in terms of biased technical change and relative
wage rigidities. More attention has been paid recently to an alternative mechanism, the
crowding-out of low-skilled workers by over-qualified workers. The objective of this paper is
both methodological and empirical. We construct a dynamic general equilibrium model with
two types of jobs and two types of workers and with search unemployment. The model is
calibrated and simulated to examine the interactions between the “skill bias” and “crowdingout”
mechanisms. When such interactions are accounted for, the model reproduces quite well
the observed unemployment changes.
We use cookies to provide you with an optimal website experience. This includes cookies that are necessary for the operation of the site as well as cookies that are only used for anonymous statistical purposes, for comfort settings or to display personalized content. You can decide for yourself which categories you want to allow. Please note that based on your settings, you may not be able to use all of the site's functions.
Cookie settings
These necessary cookies are required to activate the core functionality of the website. An opt-out from these technologies is not available.
In order to further improve our offer and our website, we collect anonymous data for statistics and analyses. With the help of these cookies we can, for example, determine the number of visitors and the effect of certain pages on our website and optimize our content.